PBGC-Negotiated Agreement Secures Pension Funding As Ampex Corp. Enters Chapter 11
FOR IMMEDIATE RELEASE
March 31, 2008
WASHINGTON-Pension plans for 5,000 workers and retirees at Ampex Corp. will be ongoing in spite of the company's March 30 chapter 11 filing, under an agreement negotiated by the Pension Benefit Guaranty Corp. (PBGC), Ampex and Hillside Capital Corp. The 1994 agreement secured the legally required minimum funding for two pension plans at Ampex, the Redwood, Calif.-based audio-video recording company. With funding security in place, the company can continue sponsoring the plans and avoid transferring their financial liabilities to the federal pension insurance program.
"This outcome underscores the importance of employers working with us in advance to make sure pension promises are not left behind when a business restructuring becomes necessary," said PBGC Director Charles E. F. Millard. "We appreciate the cooperation of Ampex and Hillside in helping to devise a solution in the best interests of employees, retirees, and their families, as well as the pension insurance program and its stakeholders. Through the agreement with the PBGC, all required pension contributions have been made to the Ampex plans, increasing the likelihood that workers will receive their promised retirement benefits."
Hillside Capital was in the group of companies under common corporate control with Ampex. Under federal pension law, companies in a controlled group share joint and several liability for minimum pension funding contributions and termination liability. The PBGC arranged the security in 1994 when it determined that bankruptcy reorganization of Ampex's corporate parent, NH Holding Inc., threatened to break up the controlled group and weaken Ampex's ability to support its pension plans. To date, Hillside Capital has advanced nearly $52 million to Ampex for pension funding.
The company's two pension plans, the Ampex Corp. Employees' Retirement Plan and the Quantegy Media Corp. Retirement Plan, were frozen in 1994. Together they are underfunded by about $70 million according to PBGC estimates.
The funding security for Ampex pensions is a product of the PBGC's Early Warning Program, under which the agency monitors companies with underfunded pension plans and negotiates protections when transactions or corporate restructurings put workers' pensions or the federal pension insurance program at risk.
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 30,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
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PBGC No. 08-31