PBGC, K&F Industries, Inc. Agree On Added Funding For Two Pension Plans
FOR IMMEDIATE RELEASE
October 15, 1997
The Pension Benefit Guaranty Corporation (PBGC) has reached an agreement with K&F Industries, Inc., a maker of aircraft braking systems and fuel tanks, that adds protection for two pension plans covering nearly 2,800 workers and retirees. The agreement, in connection with the company's refinancing, calls for additional funding and security from K&F for the plans which are underfunded by nearly $25 million on a termination basis.
"Worker pensions are financially stronger because K&F moved early to address pension funding issues," said PBGC Executive Director David M. Strauss.
K&F will pay $4.5 million into the plans by year-end. With this amount, the company will have contributed $10 million in pension funding above what is required by law, creating a credit balance. Over the life of the agreement, K&F will continue full minimum pension funding without use of this credit balance that would otherwise reduce its required contributions.
PBGC will also hold a $4.5 million letter of credit from the company's lenders and a $40 million second security interest in company assets, as protection in the event PBGC would have to make claims related to the plans. The agreement will remain in effect for a minimum of five years, and until K&F has achieved investment grade ratings or completed two years with no pension underfunding.
The agreement is an outcome of PBGC's Early Warning Program, under which the agency monitors some 500 companies with underfunded pension plans and negotiates agreements to ensure that worker' pensions are protected when transactions or restructurings occur.
K&F, headquartered in New York, manufactures wheels, brakes and anti-skid systems for commercial and military aircraft through its Aircraft Braking Systems Corp. unit in Akron, Ohio. The company also produces specialty coated fabrics for aircraft and other industrial applications through its Engineered Fabrics Corp. unit in Rockmart, Ga.
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. 98-03