PBGC and Cerberus Secure $212 Million for Safeway Workers’ Pension Plan
FOR IMMEDIATE RELEASE
February 06, 2015
WASHINGTON - Under a settlement with the Pension Benefit Guaranty Corporation, Safeway Inc., an affiliate of Cerberus Capital Management L.P., made $212 million in additional contributions to Safeway's largest pension plan. The contributions significantly improved the plan's finances, providing additional security to its 54,000 participants.
On March 6, 2014, private equity firm Cerberus and Albertsons announced the acquisition of Safeway, the Pleasanton, Calif.‐based grocery chain. The transaction resulted in the pension plan being under approximately $11 billion of secured debt, which placed additional risk on Safeway and its pension plan.
The settlement will help preserve the pension plan and addresses PBGC's concerns regarding the significant increase in risk as a result of the transaction.
"From the beginning we knew this sale would put the retirement benefits of nearly 54,000 people at risk, so we moved quickly to engage with Cerberus and Albertsons to get better funding for the plan," said Sanford Rich, PBGC's Chief of Negotiations and Restructuring. "We appreciate their desire to work with us to reach a solution that enables the business to operate effectively and protects the benefits of current and former workers at Safeway. Cerberus and its affiliated entities once again demonstrated their commitment to working collaboratively with the PBGC."
The Safeway agreement is a product of PBGC's Early Warning Program, in which the agency monitors certain companies with underfunded defined benefit pension plans to identify corporate transactions that could jeopardize pensions. PBGC takes steps to arrange suitable protections for those pensions and the pension insurance program.
PBGC protects the pension benefits of more than 41 million Americans in private‐sector pension plans. The agency is directly responsible for paying the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums, investment income, and with assets and recoveries from failed plans. For more information, visit PBGC.gov.
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PBGC No. 15-01