The employees’ 40 percent stock share in the company was bought out when Evergreen Packaging Corporation purchased Blue Ridge earlier this year. The company is now paying employees for $33 million in stock, or an average of $20,000 per worker.
The number looks big, but local banks and the union strongly advised workers against taking the direct cash payout. By breaking into the cash payout, workers would face a penalty in taxes that would deplete the amount by almost two-thirds.
“If they do have the cash payment, we’re happy for them and we’ll be there to help them, but they have to realize too that if they take that money the government will charge them for it. They’ll be penalized and taxed — it’s a double whammy,” said Jeremy Cook, director of marketing at Champion Credit Union.
Howard Taylor, president of Smoky Mountain Local 507 workers’ union, said the union took the position of advising its workers to roll their money over into 401k and IRA accounts. But Taylor said he could hardly blame those who opted for a quick infusion of cash.
“I’m sure a lot of people took the cash settlement, but in their defense, they’ve been seven years without a raise, and they put off and put off stuff to do and buy,” said Taylor.
Taylor is confident, though, that many of the workers will roll over their savings into a 401k or IRA account. He’s heard one credit union in town has nearly $3 million in Blue Ridge workers’ money in 401k and IRA accounts.
Cook seconded Taylor’s opinion.
“Most of the guys are definitely investing it in a 401k or IRA,” said Cook, who’s seen “hundreds” of employees place their money in accounts at Champion Credit Union.
There was no shortage of help when Blue Ridge workers had to decide to do with their money. Banks around town advertised their services, and signs specifically geared to Blue Ridge workers hung at United Community Bank and SunTrust Bank, among others. The union hall held a fair for employees and invited about 12 banks to come and present options to workers.
It’s difficult to say just how much money is currently floating around Canton as a result of the payout. Evergreen officials won’t disclose the exact amount of the payouts, or even the exact date they’ll be given out to workers (Oct. 12 has been an estimated date for months).
SunTrust Bank Manager Steven Lawrence said he could give a ballpark figure if workers had come in to deposit what they received, but most of the sums were so large they weren’t just deposited.
“The majority of people with payouts had amounts significant enough to do something with,” Lawrence said. SunTrust had investment specialists work with employees to figure out how to invest their funds or put them in retirement accounts.
Though many workers opted to roll the payout over to other accounts, there will undoubtedly be some for whom the idea of a tangible wad of cash was too lucrative. Those employees will likely use a large amount of cash to make a big purchase they couldn’t afford otherwise, like a car — at least that’s what Ken Wilson Ford, Canton’s largest auto dealer, is counting on.
Jeff Pruett, manager at Ken Wilson Ford, said the dealer is anticipating a pretty good turnout of Blue Ridge workers looking to score a new vehicle.
“Our inventory is a whole lot more than we normally keep,” Pruett said. He said the cash payout is directly related to the increased inventory.
Ken Wilson Ford is currently working out a financing deal with Champion Credit Union to offer to workers, Pruett said.