Employee Stock Ownership Plan

Tribune Co.'s ill-fated employee stock ownership plan is toast. In a memo to employees announcing a new retirement plan Tuesday, Chief Administrative Officer Gerry Spector said the ESOP was likely to be terminated when the Chicago-based media conglomerate emerged from bankruptcy protection. That's not a surprise to close watchers of Tribune's bankruptcy case. It became clear months ago that the banks and other investors that financed Chicago billionaire Sam Zell's 2007 leveraged buyout of the company probably would take over ownership from Tribune's employees when the reorganization plan was filed.

Tribune Co.'s ill-fated employee stock ownership plan is toast. In a memo to employees announcing a new retirement plan Tuesday, Chief Administrative Officer Gerry Spector said the ESOP was likely to be terminated when the Chicago-based media conglomerate emerged from bankruptcy protection. That's not a surprise to close watchers of Tribune's bankruptcy case. It became clear months ago that the banks and other investors that financed Chicago billionaire Sam Zell's 2007 leveraged buyout of the company probably would take over ownership from Tribune's employees when the reorganization plan was filed.

Fremont General Corp. employees lost millions of dollars on company stock in their retirement plans when the company was forced out of the troubled sub-prime loan business in March -- losses that Fremont's board should have foreseen and prevented, according to a lawsuit alleging violations of federal pension law.

Employees at Avis Inc. have acquired the company for $1.75 billion from Wesray Capital Corp., Avis said in a statement today. Avis, the country's second-largest car rental company, said the transaction was accomplished through an employee stock ownership plan that will include all of the company's 11,000 workers. The purchase marked the company's 11th change of ownership since it was founded in 1946 by Warren Avis.

As the clock ticks down on Tribune Co.'s self-imposed deadline of Saturday for auctioning off the big media company, much is unknown about the apparent favored bid from Chicago real estate magnate Sam Zell and how it would be structured. Zell, 65, has said little publicly except that he would invest $300 million in cash and become the minority partner of a newly created employee stock ownership plan that would buy up the company's shares and take Tribune private.

The Labor Department sued Enron Corp. and former executives and directors Thursday, alleging they violated pension laws and hurt Enron employees by mismanaging retirement plans full of overpriced company stock. In the civil lawsuit, the government is seeking to recover hundreds of millions of dollars in retirement money that employees lost when the energy-trading company careened toward bankruptcy protection in late 2001 and the stock collapsed.

UAL Corp.'s employee stock plan gained permission from the Internal Revenue Service to sell 3.9 million more shares, raising the possibility that the company's workers will lose their majority control. Selling the stock could reduce employee ownership below 20% in the next few weeks, the company said. Below that threshold, workers lose the 55% control of voting rights they gained in the 1994 employee stock ownership plan. UAL shares fell 8 cents to 98 cents on the NYSE.

Do you spend more time thinking about retiring than you do running your business? Would you rather play golf than begin the ordeal of finding buyers for your company and negotiating a sale? Your buyers might be closer than you think; in fact, you see them every day. And they might be in position to offer you a better deal than any outside investor, even if they command little or no capital of their own. Who are the buyers? Your employees--and the deal is an employee stock ownership plan.

In a deal that could put six-figure checks in the hands of hundreds of factory workers, an aerospace company said Monday that it plans to buy Kirkhill Rubber Co. of Brea for about $80 million. Kirkhill, whose products range from space shuttle parts to ultra-bouncy toy balls, is owned mainly by its 700 workers. Using loans, the employees teamed up in 1988 to buy two-thirds of the closely held company's stock.

As a member and officer of the Assn. of Flight Attendants representing the flight attendants at United Airlines, I must say that some of the information in James Flanigan's column of July 16 ["Employee-Owners Have United on the Ascent Again"] is erroneous. It states that what the United employees have after a year of ESOP is survival, respect, a measure of job security and the sense of victory. This is not true for the flight attendants. Though later in the column it mentions that we did not join the ESOP [employee stock ownership plan]

Consolidated Rail Corp. announced today it will offer employees a chance to buy up to $600 million in company stock under an employee stock ownership plan. Conrail spokesman Robert Libkind said the plan is designed to boost shareholder value and improve employees' performance. Conrail's announcement pushed its stock price up 12.5 cents to $38 on the New York Stock Exchange. Exchange authorities briefly suspended trading in the stock for a routine inquiry into the ESOP.

In a $375-million deal, the troubled New Orleans shipyard, together with six other industrial products subsidiaries, will become a new company, Avondale Corp., owned by its employees, Sen. Russell Long (D-La.) and company officials said. The deal will be financed with a $190-million bank loan and $80 million in excess assets available from terminating the Ogden pension plan. The move is scheduled to be completed in September.