[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Notices]
[Pages 38480-38481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18652]
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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; St. Louis Cardinals, 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 St. Louis
Cardinals, L.P., a Missouri limited partnership, 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 result in 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 September 9, 1996.
ADDRESSES: All written comments (at least three copies) should be
addressed to: Pension Benefit Guaranty Corporation, Office of the
General Counsel, 1200 K Street, N.W., Washington, D.C. 20005-4026, or
hand-delivered to Suite 340 at the above address between 9:00 a.m. and
4:00 p.m., Monday through Friday. The non-confidential portions of the
request for an exemption and the comments received will be available
for public inspection at the PBGC Communications and Public Affairs
Department, Suite 240, at the above address, between the hours of 9:00
a.m. and 4:00 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT: Ralph L. Landy, Office of the General
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, N.W.,
Washington, D.C. 20005-4026; telephone 202-326-4127 (202-326-4179 for
TTY and TDD). These are not toll-free numbers.
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 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). Such questions are to be decided by the plan
sponsor in the first instance, and any disputes are to be resolved in
arbitration. 29 U.S.C. Sections 1382, 1399, 1401.
Under the PBGC's regulation on variances for sales of assets (29
CFR Part 2643), a request for a variance or waiver of the bond/escrow
requirement under any of the tests established in the regulation (29
CFR 2643.12-2643.14) 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. section 552(b)(4) (the
Freedom of Information Act).
Under section 2643.3 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 2643.3(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 St. Louis Cardinals, 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 St. Louis
Cardinals Baseball Team from the St. Louis Baseball Club, Inc. (``the
Seller'') on
[[Page 38481]]
March 21, 1996. In the request, the Buyer represents among other things
that:
1. The Seller was obligated to contribute to the Major League
Baseball Players Benefit Plan (the ``Plan'') for certain employees of
the sold operations.
2. The Buyer is a Missouri limited partnership.
3. The Buyer has agreed to assume the obligation to contribute to
the Plan for substantially the same number of contribution base units
as the seller.
4. 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
Plan within the five plan years following the sale and fail to pay its
withdrawal liability.
5. The estimated amount of the unfunded vested benefits allocable
to the Seller with respect to the operations subject to the sale is
$7,340,095.
6. The amount of the bond/escrow required under section
4204(a)(1)(B) is approximately $873,000.
7. The transaction had to be approved by Major League Baseball
which required that the debt-equity ratio of the Buyer be no more than
60 percent. The Buyer submitted a financial statement that shows that
its net tangible assets exceed the unfunded vested benefits allocable
to the Seller with respect to the purchased operations. The Buyer has
requested confidential treatment of its financial statements on the
ground that they are confidential within the meaning of 5 U.S.C.
section 552.
8. A copy of the request, excluding the financial statement of the
Buyer, was sent to the Fund and to the collective bargaining
representative of the Seller's employees.
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. Comments received, as well as the
relevant non-confidential information submitted in support of the
request, will be available for public inspection at the address set
forth above.
Issued at Washington, D.C., on this 16th day of July, 1996.
Martin Slate,
Executive Director.
[FR Doc. 96-18652 Filed 7-23-96; 8:45 am]
BILLING CODE 7708-01-P
