PBGC, Pillowtex Agree on Protection for Fieldcrest Pensions
FOR IMMEDIATE RELEASE
December 19, 1997
The Pension Benefit Guaranty Corporation (PBGC) and Pillowtex Corporation (NYSE:PTX) today agreed on $40 million in protection for underfunded pensions covering 26,000 workers and retirees of Fieldcrest Cannon Inc. (NYSE:FLD), which is being acquired by Pillowtex.
"Protecting Americans' retirement security is one of my top priorities as Secretary of Labor," said Labor Secretary Alexis M. Herman, Chairman of the PBGC Board of Directors. "I am pleased that Pillowtex Corporation and PBGC are taking essential steps needed to ensure the protection and retirement security of Fieldcrest Cannon workers, retirees and its pension fund."
Under the agreement, Pillowtex will provide PBGC with a $15 million letter of credit and a $25 million first security interest in property, plants and equipment, which will completely protect the pension underfunding. The agreement will be in effect for a minimum of five years, and will continue thereafter until the pension plans are fully funded, Pillowtex debt receives an investment grade rating or Pillowtex meets certain other financial benchmarks.
"Pillowtex and PBGC worked together to come up with an agreement that provides added security to protect the pensions of these textile workers and the pension insurance program," said PBGC Executive Director David M. Strauss.
Dallas-based Pillowtex, which manufactures bedding products, operates facilities in the U.S. and Canada with about 4,000 employees. Fieldcrest Cannon, a manufacturer of bath and bedding products, is based in Kannapolis, N.C., and operates facilities with about 11,000 employees.
The agreement is a product of PBGC's Early Warning Program under which the agency monitors companies with underfunded pension plans and negotiates agreements when transactions occur to ensure that workers' pensions and the federal pension insurance program 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 about 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 by investment returns.
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PBGC No. 98-09