PBGC/Del Monte Agree to Add $55 Million to Del Monte Pension Plans
FOR IMMEDIATE RELEASE
April 15, 1997
The Pension Benefit Guaranty Corporation (PBGC) and Del Monte Corporation today agreed that Del Monte will improve funding of its underfunded pension plans by accelerating required pension payments, contributing $55 million in cash over five years, and providing security for a portion of this pension plan funding. Part of the contribution is expected to exceed required amounts.
"When companies structure transactions, they need to safeguard their pension promises and make sure that the benefits of workers and retirees are protected. We are pleased that Del Monte worked cooperatively and productively with us to provide additional funding to its pension plans," said PBGC Acting Executive Director John Seal.
Del Monte, which is headquartered in San Francisco, CA, is being purchased by Texas Pacific Group of Ft. Worth, TX and other investors in a leveraged buy-out. PBGC estimates that the plans are underfunded by $90 million with assets of $260 million and liabilities of $350 million. As a result of the agreement, the pension plans are expected to be close to fully funded at the end of the five year period.
Under the terms of the agreement, $30 million will be added to the plans in the first 18 months, including an initial payment of $15 million due within 30 days of the sale. Funding for the later three years (1999-2001) will be secured by an irrevocable $20 million letter of credit.
The agreement is designed to strengthen three pension plans covering over 6,700 workers and retirees in Alabama, California, Illinois, Indiana, Minnesota, Texas, Washington and Wisconsin.
The agreement is a product of PBGC's Early Warning Program under which the agency monitors some 500 companies with underfunded pension plans and negotiates agreements when transactions occur to ensure that workers' pensions are protected.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in about 50,000 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 investment returns.
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PBGC No. 97-24