Heard Off the Street: Alcoa chiefs breathing sigh of relief

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Fishermen love to tell tall tales about the one that got away, but such is not the case with the anglers at Alcoa. They are breathing sighs of relief that the big fish they tried to land nearly six years ago ended up on someone else's hook.

Rio Tinto -- a London-based miner of iron ore, copper, gold and other commodities -- agreed in July 2007 to pay $38 billion for Alcan, a Montreal-based aluminum producer. Rio Tinto's offer topped a $28 billion bid extended by Alcoa.

Last week, Rio Tinto announced that CEO Tom Albanese, who engineered the Alcan purchase, and another top executive are stepping down after the company was forced to write down the value of its aluminum and coal assets by $14 billion. About $11 billion of the aftertax adjustment relates to Rio Tinto's aluminum business, with most of that red ink flowing from Alcan.

Alcoa's refusal to top Rio Tinto's bid prompted one analyst to commend then-Alcoa chairman and CEO Alain Belda for demonstrating "a keen sense of fair value."

"We have more attractive options for delivering additional value to shareholders," Mr. Belda promised at the time.

Rio Tinto landed Alcan near the height of a commodities boom that continued lifting metals and mining stocks after the deal was consummated. One year later, shares of U.S. Steel topped out at $196 per share and it cost $117 to purchase a share of Consol Energy.

Initially, Alcoa generated the same kind of froth. The day after the aluminum producer said it was walking away from Alcan, its shares closed at $47.35, a seven-year high. The run-up was based on speculation that Australia's BHP Billiton or some other acquisitive mining concern would gobble up Alcoa. But the shares backed off a few days later after Australian newspaper reports, citing the usual unnamed sources, reported that BHP was no longer interested in Alcoa.

Then came the global recession and financial crisis, which devastated commodities demand and generated the buyer's remorse that follows so many blockbuster deals. Commodities stocks tumbled, and many continue trading for fractions of their former value. U.S. Steel closed Friday at $24.77 while Consol finished at $ 31.88.

While Alcoa dodged the disaster that awaited Rio Tinto at Alcan, its shareholders still yearn for the value Mr. Belda spoke of. In fact, from the end of July 2007 through the end of last year, Alcoa shares depreciated faster than those of the more diversified Rio Tinto, falling 77 percent versus a 6 percent drop in the value of Rio Tinto shares.

Alcoa closed Friday at $9, up 4 percent so far this year.

Christine Zarnich of the South Side Slopes often wondered whether the 10 years she put in at Equibank entitled her to a pension. But the 62-year-old could not figure out who or where to call to find out, because the Pittsburgh bank was acquired by Integra in 1993, which was swallowed by National City in 1996, which was taken over by PNC Financial Services in 2008.

Ms. Zarnich was up against a problem workers can face when pension plans are transferred because of mergers, acquisitions or bankruptcies. The transfers make it hard for former workers to track down who holds their pension money.

"I had no clue where I could go to get information," said Ms. Zarnich, who said she worked for Equibank from 1974 until 1984.

Then Ms. Zarnich read a Dec. 30 Post-Gazette story about unclaimed pension benefits. The story included a toll-free telephone number -- 1-866-735-7737 -- for the Mid-America Pension Rights Project. The organization has tracked down an estimated $27 million in pension benefits for workers since it was founded in 2001.

Ms. Zarnich ended up speaking with Gail Webb, manager of the project's Ohio office. Ms. Webb had just gotten off the phone with someone who formerly worked for Equimark, Equibank's parent. That caller told Ms. Webb she was receiving a monthly pension check from Pacific Life based on her career at Equimark, but thought she also might be entitled to a lump sum payment.

Ms. Webb was not able to find any evidence that the lump sum payment was possible. But she was able to help Ms. Zarnich, telling her to call Pacific Life. The insurance company asked for Ms. Zarnich's Social Security number and her address at the time she worked for the bank. Based on her correct responses, Pacific Life told her she is eligible for a small monthly annuity check when she turns 65.

Somewhere along the line, whoever was responsible for Equibank's pension plan paid Pacific Life to take it over. That's why the insurer is providing monthly annuity checks like the ones Ms. Zarnich will start receiving in a few years.

After leaving Equibank, Ms. Zarnich worked at the University of Pittsburgh and UPMC until retiring in 2010. She currently gives accordion lessons, something she said she's done since she was 17. Her father was the late Joseph Zarnich, whose prowess with the instrument earned him the nickname "The Accordion Man." He died in 2005.

Ms. Zarnich said her Equibank pension benefits, which will amount to less than $2,000 annually, will help pay for her medications.

"It will be a nice supplement to my Social Security," she said.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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