[Federal Register: July 9, 2003 (Volume 68, Number 131)]
[Notices]
[Page 41025-41026]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy03-144]
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PENSION BENEFIT GUARANTY CORPORATION
Pendency of Request for Exemption From the Bond/Escrow
Requirement Relating to the Sale of Assets by an Employer Who
Contributes to a Multiemployer Plan; Florida Marlins, L.P.
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of pendency of request.
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SUMMARY: This notice advises interested persons that the Pension
Benefit Guaranty Corporation has received a request from the Florida
Marlins, L.P., for an exemption from the bond/escrow requirement of
section 4204(a)(1)(B) of the Employee Retirement Income Security Act of
1974, as amended, with respect to the Major League Baseball Players
Benefit Plan. Section 4204(a)(1) provides that the sale of assets by an
employer that contributes to a multiemployer pension plan will not
constitute a complete or partial withdrawal from the plan if certain
conditions are met. One of these conditions is that the purchaser post
a bond or deposit money in escrow for the five-plan-year period
beginning after the sale. The PBGC is authorized to grant individual
and class exemptions from this requirement. Before granting an
exemption the PBGC is required to give interested persons an
opportunity to comment on the exemption request. The purpose of this
notice is to advise interested persons of the exemption request and
solicit their views on it.
DATES: Comments must be submitted on or before August 25, 2003.
ADDRESSES: Comments may be mailed to the Office of the General Counsel,
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington,
DC 20005-4026, or delivered to Suite 340 at the same address. Comments
also may be sent by Internet e-mail to reg.comments@pbgc.gov. The PBGC
will make the comments received available on its Web site, http://www.pbgc.gov.
Copies of the comments and the non-confidential portions
of the request may be obtained by writing the PBGC's Communications and
Public Affairs Department (CPAD) at Suite 240 at the above address or
by visiting or calling CPAD during normal business hours (202-325-
4040).
FOR FURTHER INFORMATION CONTACT: Jason E. Wolf, Office of the General
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 20005-4026; 202-326-4020. (For TTY/TDD users, call the
Federal Relay Service toll-free at 1-800-877-8339 and ask to be
connected to 202-326-4020).
SUPPLEMENTARY INFORMATION:
Background
Section 4204 of the Employee Retirement Income Security Act of
1974, as amended by the Multiemployer Pension Plan Amendments Act of
1980, (``ERISA'' or ``the Act''), provides that a bona fide arm's-
length sale of assets of a contributing employer to an unrelated party
will not be considered a withdrawal if three conditions are met. These
conditions, enumerated in section 4204(a)(1)(A)-(C), are that--
(A) The purchaser has an obligation to contribute to the plan with
respect to the operations for substantially the same number of
contribution base units for which the seller was obligated to
contribute;
(B) The purchaser obtains a bond or places an amount in escrow, for
a period of five plan years after the sale, in an amount equal to the
greater of the seller's average required annual contribution to the
plan for the three plan years preceding the year in which the sale
occurred or the seller's required annual contribution for the plan year
preceding the year in which the sale occurred (the amount of the bond
or escrow is doubled if the plan is in reorganization in the year in
which the sale occurred); and
(C) The contract of sale provides that if the purchaser withdraws
from the plan within the first five plan years beginning after the sale
and fails to pay any of its liability to the plan, the seller shall be
secondarily liable for the liability it (the seller) would have had but
for section 4204.
The bond or escrow described above would be paid to the plan if the
purchaser withdraws from the plan or fails to make any required
contributions
[[Page 41026]]
to the plan within the first five plan years beginning after the sale.
Additionally, section 4204(b)(1) provides that if a sale of assets
is covered by section 4204, the purchaser assumes by operation of law
the contribution record of the seller for the plan year in which the
sale occurred and the preceding four plan years.
Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty
Corporation (``PBGC'') to grant individual or class variances or
exemptions from the purchaser's bond/escrow requirement of section
4204(a)(1)(B) when warranted. The legislative history of section 4204
indicates a Congressional intent that the sales rules be administered
in a manner that assures protection of the plan with the least
practicable intrusion into normal business transactions. Senate
Committee on Labor and Human Resources, 96th Cong., 2nd Sess., S.1076,
The Multiemployer Pension Plan Amendments Act of 1980: Summary and
Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong. Rec.
S10117 (July 29, 1980). The granting of an exemption or variance from
the bond/escrow requirement does not constitute a finding by the PBGC
that a particular transaction satisfies the other requirements of
section 4204(a)(1).
Under the PBGC's regulation on variances for sales of assets (29
CFR part 4204), a request for a variance or waiver of the bond/escrow
requirement under any of the tests established in the regulation
(sections 4204.12 & 4204.13) is to be made to the plan in question. The
PBGC will consider waiver requests only when the request is not based
on satisfaction of one of the four regulatory tests or when the parties
assert that the financial information necessary to show satisfaction of
one of the regulatory tests is privileged or confidential financial
information within the meaning of 5 U.S.C. 552(b)(4) (Freedom of
Information Act).
Under section 4204.22 of the regulation, the PBGC shall approve a
request for a variance or exemption if it determines that approval of
the request is warranted, in that it--
(1) Would more effectively or equitably carry out the purposes of
Title IV of the Act; and
(2) Would not significantly increase the risk of financial loss to
the plan.
Section 4204(c) of ERISA and section 4204.22(b) of the regulation
require the PBGC to publish a notice of the pendency of a request for a
variance or exemption in the Federal Register, and to provide
interested parties with an opportunity to comment on the proposed
variance or exemption.
The Request
The PBGC has received a request from the Florida Marlins, L.P.
(formerly known as Montreal Expos, L.P.) (the ``Buyer'') for an
exemption from the bond/escrow requirement of section 4204(a)(1)(B)
with respect to its purchase of the Florida Marlins Baseball Team from
the F.M.B.C. II, L.L.C. (the ``Seller'') on February 15, 2002. In the
request, the Buyer represents among other things that:
1. The Seller was obligated to contribute to the Major League
Baseball Players Benefit Benefit Plan (the ``Plan'') for certain
employees of the sold operations.
2. The Buyer has ageed to assume the obligation to contribute to
the Plan for substantially the same number of contribution base units
as the seller.
3. The Seller has agreed to be secondarily liable for any
withdrawal liability it would have had with respect to the sold
operations (if not for section 4204) should the Buyer withdraw from the
Fund within the five plan years following the sale and fail to pay its
withdrawal liability.
4. The estimated amount of the unfunded vested benefits allocated
to the seller with respect to the operations subject to the sale could
be as high as $11,200,000.
5. The amount of the bond/escrow established under section
4204(a)(1)(B) is $1,254,904.
6. The major league clubs have established the Major League Central
Fund (the ``Central Fund'') pursuant to the Major League Constitution.
Under this agreement, contributions to the plan for all participating
employers are paid by the Office of the Commissioner of Baseball from
the Central Fund on behalf of each participating employer in
satisfaction of the employer's pension liability under the Plan's
funding agreement. The monies in the Central Fund are derived directly
from (i) gate receipts from All-Star games; (ii) radio and television
revenue from World Series, League Championship Series, Division Series,
All-Star Games, and (iii) certain other radio and television revenue,
including revenues foreign broadcasts from regular, spring training and
exhibition games.
7. In support of the waiver request, the requester asserts that:
``The Plan is funded directly from Revenues which are paid from the
Central Fund directly to the Plan without passing through the hands of
any of the clubs. Therefore, the Plan enjoys a substantial degree of
security with respect to contributions on behalf of the clubs. A change
in ownership of a club does not affect the obligation of the Central
Fund to fund the Plan out of the Revenue. As such, approval of this
exemption request would not significantly increase the risk of
financial loss to the Plan.''
8. During the 2000 Plan year, approximately $29.3 million was paid
into the Plan on behalf of all major league clubs.
9. A complete copy of the request was sent to the Plan and to the
Major League Baseball Players Association by certified mail, return
receipt requested.
Comments
All interested persons are invited to submit written comments on
the pending exemption request to the above address. All comments will
be made a part of the record. The PBGC will make the comments received
available on its Web site, http://www.pbgc.gov. Copies of the comments
and the non-confidential portions of the request may be obtained by
writing the PBGC's Communications and Public Affairs Department (CPAD)
at Suite 240 at the above address or by visiting or calling CPAD during
normal business hours (202-325-4040).
Issued at Washington, DC, on this 2nd day of July, 2003.
Steven A. Kandarian,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 03-17350 Filed 7-8-03; 8:45 am]
BILLING CODE 7708-01-P