Federal Pension Insurer Moves to Assume Cone Mills Pension Plan
FOR IMMEDIATE RELEASE
January 28, 2004
The Pension Benefit Guaranty Corporation today announced that it is moving to assume responsibility for the pensions of more than 6,100 workers and retirees of Cone Mills Corp., a manufacturer of denim and home-furnishing fabrics based in Greensboro, N.C.
"The PBGC is taking this action because Cone Mills is liquidating in bankruptcy and no asset purchaser has stepped forward to assume the pension plan," said Executive Director Steven A. Kandarian. "Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits, and other employees will receive benefits when they are eligible to retire."
Cone Mills Corp. filed for Chapter 11 bankruptcy protection on September 24, 2003. The company's assets will be sold at a court-approved auction January 29, 2004, with final approval of the sale expected at a February 9 bankruptcy court hearing. The company has entered into an asset purchase agreement with WL Ross & Co., a restructuring firm based in New York City. WL Ross & Co. recently acquired the textile-making assets of Burlington Industries, an agreement that included assumption of the pension plan.
The Pension Plan for Cone Mills Corp. is 58 percent funded, with more than $80 million in assets to cover $139 million in benefit promises. The PBGC estimates it will be liable for about $43 million of the $59 million shortfall if the agency becomes trustee. Unless an asset purchaser agrees to continue the plan, it will terminate as of January 29, 2004.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2004 is $44,386 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
If the PBGC becomes trustee, the agency will send notification letters to all participants in the Cone Mills pension plan. After the transfer of plan documents, the agency will review individual records and calculate each person's benefit according to plan provisions, asset allocation rules, and federal guarantee limits. Workers and retirees with questions may contact PBGC toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242. General information about PBGC's pension insurance program is available at www.pbgc.gov.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans.
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PBGC No. 04-24