Electrolux and White Consolidated Industries, Inc. (WCI), an Electrolux subsidiary in the U.S. and the PBGC entered into a Memorandum of Understanding (“Agreement”) whereby WCI will not pursue further legal actions regarding its appeal of the U.S. District Court’s decision against WCI regarding pension obligations. Similarly, the PBGC will not pursue the remedies to which it is entitled as a result of the District Court’s decision.
Pursuant to the agreement, the PBGC and pension plan participants will be compensated for the pension benefits that were the subject of the litigation. The method of satisfying these pension obligations will be finally resolved following discussions with the relevant regulatory bodies. After obtaining regulatory approvals, WCI will resume sponsoring of the pension plans in question. If resumption of the pension plans does not go forward for any reason, WCI will pay a total of USD 180 million, plus interest to PBGC and plan participants. In any event, WCI expects that the ultimate cost relating to the agreement will be within the USD 225 million reserve recorded in the third quarter of 1999.
The case originates in 1985, one year before Electrolux Group bought White Consolidated Industries (WCI), when WCI sold five steel related companies in the US to another company. As part of the purchase arrangement, the buyer assumed responsibility for pension liabilities. In the early 1990’s the buyer defaulted on its obligations related to the various pension plans and the plans terminated. The Pension Benefit Guaranty Corporation (PBGC), a US government corporation created to insure retirement benefits under private pension plans, stepped in and took over the pension plans. Since 1991, PBGC and WCI have been tied up in a complicated legal process that is now settled.
Pursuant to the agreement, the PBGC and pension plan participants will be compensated for the pension benefits that were the subject of the litigation. The method of satisfying these pension obligations will be finally resolved following discussions with the relevant regulatory bodies. After obtaining regulatory approvals, WCI will resume sponsoring of the pension plans in question. If resumption of the pension plans does not go forward for any reason, WCI will pay a total of USD 180 million, plus interest to PBGC and plan participants. In any event, WCI expects that the ultimate cost relating to the agreement will be within the USD 225 million reserve recorded in the third quarter of 1999.
The case originates in 1985, one year before Electrolux Group bought White Consolidated Industries (WCI), when WCI sold five steel related companies in the US to another company. As part of the purchase arrangement, the buyer assumed responsibility for pension liabilities. In the early 1990’s the buyer defaulted on its obligations related to the various pension plans and the plans terminated. The Pension Benefit Guaranty Corporation (PBGC), a US government corporation created to insure retirement benefits under private pension plans, stepped in and took over the pension plans. Since 1991, PBGC and WCI have been tied up in a complicated legal process that is now settled.
For further information contact:
Johan Bygge, +46 8 738 61 15
