PBGC Reaches Agreement Protecting Anchor Glass Pensions
FOR IMMEDIATE RELEASE
February 05, 1997
The Pension Benefit Guaranty Corporation (PBGC) today announced it has reached an agreement which will allow the Anchor Glass Container Corporation pension plans to continue with protection for the pensions of 15,600 workers and retirees after the assets of the company, a subsidiary of Vitro, Sociedad Anonima of Mexico, are sold.
"PBGC was able to forge agreements that continue the pension plans and better protects the workers' pensions, without the need for PBGC to take over the plans," said PBGC Executive Director Martin Slate.
The three pension plans are underfunded by some $190 million on a termination basis, with assets of about $325 million and liabilities of nearly $515 million. The newly formed Anchor Glass, which is purchasing most of the Anchor Glass assets, will pay missed pension contributions totaling about $18 million at the close of the sale, half in cash and the remainder in cash or New Anchor preferred stock. New Anchor will also continue to make all required pension contributions to the three Anchor Glass pension plans, which last year were $30 million.
Owens-Brockway, a subsidiary of Owens-Illinois Corporation, is acquiring a smaller portion of Anchor Glass, covering about 500 workers, and will be responsible for about $15 million of the unfunded pension liability.
Vitro has guaranteed payments of up to $70 million over 10 years in the event that PBGC must terminate any of the pension plans and New Anchor fails to comply with its obligations. The amount and the term of the payments will be proportionally reduced if the termination occurs after January 31, 2002.
The sale removes Anchor Glass from the control of its Mexican parent and without the agreement would have relieved Vitro and its subsidiaries from responsibility for the pension liability.
The agreement is the result of negotiations that began shortly after PBGC announced last month that it would ask the U.S. District Court in Brooklyn, NY, to terminate the Anchor Glass pension plans and to have the federal pension insurance agency named trustee. PBGC feared that the structure of the proposed sale would have left the pension plans without sufficient protection, posing risk to workers and the pension insurance program.
With the agreement, PBGC will not pursue its proposed court action to terminate and take over the Anchor Glass pension plans.
The glass container manufacturer, based in Tampa, FL, with facilities in 11 states, has been looking for a solution to its financial problems since it filed for Chapter 11 protection last September. On December 20, 1996, the bankruptcy court approved the sale of a major portion of Anchor Glass assets to Consumers Packaging, a Canadian company that proposed the creation of a new Anchor Glass. Owens-Brockway is purchasing the remaining assets.
PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers nearly 42 million American workers and retirees participating in about 55,000 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. 97-14