PBGC, TRICON Global Agree on Pension Protection in PepsiCo Spinoff
FOR IMMEDIATE RELEASE
October 06, 1997
The Pension Benefit Guaranty Corporation (PBGC) and TRICON Global Restaurants, Inc. (NYSE:YUM) today agreed on $50 million of protection in the form of security for two TRICON pension plans in the event of plan terminations. About 64,000 TRICON hourly and salaried restaurant workers are covered by the plans. TRICON, formed from PepsiCo, Inc.(NYSE: PEP) units Pizza Hut, Taco Bell and KFC, was spun off to PepsiCo shareholders today.
"This Administration believes that people who work hard for a living deserve to have their pensions protected," said Secretary of Labor Alexis M. Herman, Chairman of the PBGC Board of Directors. "We want the pensions that workers earn to be there when they retire."
"PepsiCo, TRICON and PBGC worked together to provide added security for the pensions of these restaurant workers," said PBGC Executive Director David M. Strauss.
The agreement promises PBGC security for up to $50 million for pension plan liabilities. The security is comprised of a $25 million letter of credit from TRICON's lenders, with another $25 million of security to be provided by TRICON in the event the company's lenders seek additional collateral for loans that are currently unsecured. With this security, PBGC could more readily recover on any claims that might arise in the future.
The agreement will be in effect for a minimum of five years, and will continue thereafter until the pension plans are fully funded on a PBGC basis or TRICON debt obtains an investment grade rating.
TRICON Global Restaurants, Inc., based in Louisville, Ky., has more than 29,000 company-owned and franchised outlets in 95 countries.
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. 98-01