PBGC, Ispat, Inland Steel Reach Agreement Protecting Pensions of 27,000
FOR IMMEDIATE RELEASE
July 16, 1988
The Pension Benefit Guaranty Corporation (PBGC), Ispat International, N.V. (NYSE:IST) and Inland Steel Industries, Inc. (NYSE:IAD) have agreed on protection for the underfunded pensions of Inland Steel Company (ISC), the basic steelmaking subsidiary of Inland Steel Industries which Ispat is acquiring.
"Ispat and Inland took pension security into account as they structured their transaction," said PBGC Executive Director David M. Strauss. "Working with PBGC, they have added to the financial strength of this pension plan covering primarily steelworkers."
The Inland Steel Industries Pension Plan has over $600 million in unfunded vested benefits, according to PBGC estimates, with assets of $1.9 billion and liabilities of $2.5 billion. The plan covers 27,000 workers.
Under the agreement, Ispat and Inland have pledged $330 million worth of financial protection for unfunded pension liabilities. This consists of a $25 million immediate cash payment into the plan, future payments to the plan valued at $20 million, a $160 million letter of credit, liens on ISC assets valued at $75 million and a guarantee of $50 million from Ryerson Tull, Inc., a subsidiary of Inland Steel Industries, in the event of a plan termination. The agreement will remain in effect until at least July 2003.
Ispat International is a Netherlands-based steel holding company. Inland Steel Company, East Chicago, Ind., is the sixth largest U.S. steel producer.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 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. 98-33