PBGC, Galey & Lord Agree on Protection for Dominion Textile Pensions
FOR IMMEDIATE RELEASE
January 30, 1998
The Pension Benefit Guaranty Corporation (PBGC) and Galey & Lord, Inc. (NYSE:GNL), Greensboro, N.C., have reached an agreement that fully protects underfunded pensions covering about 4,500 workers and retirees of certain Dominion Textiles, Inc. apparel fabric operations being purchased by Galey & Lord.
"Galey & Lord's commitment to strengthen the financing of these pension plans ensures that workers' pensions will be protected following the transaction," said PBGC Executive Director David M. Strauss.
The agreement calls for Galey & Lord to grant PBGC a lien on land and buildings worth $13.5 million and make pension contributions, in addition to minimum funding, totaling $5 million cash over the next two years. Should there be a time when the pension plans terminate, the lien helps to ensure that participants receive full benefits.
The agreement will be in effect for a minimum of five years, and will continue thereafter until the pension plans are fully funded for two consecutive years or Galey & Lord debt receives an investment grade rating.
Galey & Lord and another textile company, Polymer Group, Inc. (NYSE:PGH), are purchasing Dominion Textiles, Inc. Facilities being acquired by Galey & Lord include plants in Erwin, N.C. and Columbus, Ga. The company is a leading producer of woven apparel fabrics, sold principally to makers of sportswear and commercial uniforms.
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. 98-12