PBGC will pay retirement benefits for more than 2,700 current and future retirees at Walter Energy Inc., a producer and exporter of coal based in Birmingham, Ala. The agency is stepping in because Walter Energy plans to sell the majority of its assets in bankruptcy proceed.
The agency is stepping in because Walter Energy plans to sell the majority of its assets in bankruptcy proceedings and the potential buyers have signaled they will not assume the pension plan.
Walter Energy sponsors the Pension Plan for Salaried Employees of Walter Energy Inc. Subsidiaries, Divisions and Affiliates. This plan will end on Dec. 31, 2015.
PBGC will pay all pension benefits earned by Walter Energy retirees up to the legal limit of $60,136 a year for a 65-year-old.
Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
Employees and retirees who are participants in the plan will continue to receive benefits from the company until PBGC assumes responsibility.
According to PBGC estimates, the Walter Energy plan is 70 percent funded, with $219 million in assets to cover $314 million in benefits. The agency is expected to cover the entire $96 million shortfall.
Walter Energy is the largest U.S.-based producer of coking coal used to make steel. The company and 22 of its subsidiaries and affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Birmingham, Ala., on July 15, 2015. The filing was spurred by a drop in coal prices and an increased debt load from the purchase of Vancouver-based Western Coal Corp. An auction for the company's assets is scheduled for early January.