Billionaire Keeps Paychecks Going Out at Damaged Ark. Business

April 12, 2006

Billionaire financier Carl Icahn is using personal funds to keep paychecks going out to 350 Arkanas employees idled when a railroad tank-car plant operated by one of his companies was shut down after being hit by a tornado.

Icahn decided to use some of his own money to keep employees’ pay and benefits intact at the American Railcar Industries Inc. plant here as “a token of my appreciation, so to speak” for the workers’ loyalty and work ethic, he told the Arkansas Democrat-Gazette.

The American Railcar plant was shut down after Marmaduke was struck by a devastating tornado on April 2. No one was killed in Arkansas by tornadoes that touched down in several places in northeast Arkansas that night, but dozens of people were injured at Marmaduke. Authorities said 23 people died in the same series of storms in Tennessee, three were killed in Missouri, and one in Illinois.

After the tornado, the St. Charles, Mo.-based company said it had shut down the Marmaduke plant while assessing damage. It said it was insured for property damage and for business interruptions.

As of December, Icahn owned 53 percent of American Railcar shares, and he is chairman of the company. Stock in the company was offered to the public in January.

According to a news release from the company, Icahn stepped in to “bridge the gap until the company and its insurance provides funds to continue to pay full wages and benefits to all employees working for the tank car … operations at Marmaduke.”

The company did not disclose how much money might be needed from Icahn to keep the paychecks going out.

Bill Benac, American Railcar’s chief financial officer, said Icahn’s action was “good corporate citizenship.” He said it kept the company from having to decide whether to pay the Marmaduke employees as it pays its insurance deductible for the storm damage.

“Mr. Icahn comes along and says, ‘No decision. I’ll just pay that,”’ Benac said.

Marmaduke Mayor Nileane Drope expressed pleasure at Icahn’s action, saying she was glad that American Railcar employees and their families wouldn’t be hurt financially by the plant’s temporary shutdown.

“Everybody’s pulling together,” she said.

The company also operates a plant at nearby Paragould with more than 1,000 workers. Benac said some Marmaduke employees may work for a time at either that plant or another in Kennett, Mo. He said the Marmaduke plant will reopen, but he declined to say when.

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