PBGC, Allis-Chalmers Finalize Pact to Secure Pensions
FOR IMMEDIATE RELEASE
June 17, 1999
The Pension Benefit Guaranty Corporation (PBGC) and Allis-Chalmers Corporation today announced final settlement of PBGC's 1997 takeover of the Allis-Chalmers Consolidated Pension Plan. The settlement is not expected to affect participant benefits.
The settlement agreement grants PBGC 35 percent of Allis-Chalmers common stock in settlement of $63 million in liability for the underfunded plan, which had assets of $209 million and liabilities of $272 million when it terminated. As a result, PBGC received the right to designate three out of seven members on the firm's Board of Directors. PBGC's special situations manager, Pacholder Associates, Inc., Cincinnati, will be assigned the management of this asset, including representation of PBGC on the Allis-Chalmers Board of Directors.
Financially distressed Allis-Chalmers made no pension contributions after January 1996 and asked PBGC to take over the underfunded plan which covered 9,000 former workers and retirees. To secure the missed contributions, PBGC filed liens on behalf of the plan on the firm's facilities in Milwaukee and Houston. The settlement agreement specifies certain conditions under which PBGC will release its liens.
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 more than 44,000 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. 99-27