PBGC Chief: Daimler, Cerberus Went Above and Beyond in Deal

May 17, 2007 (PLANSPONSOR.com) - The head of the nation's private sector pension insurer on Friday applauded Daimler Chrysler and Cerberus Capital Management for their efforts to bolster Chrysler's pension program.

Vince Snowbarger, interim director of the Pension Benefit Guaranty Corporation (PBGC), said in a statement that both Daimler Chrysler and Cerberus consulted with PBGC officials during the negotiations leading up to the $7.4 billion deal announced Monday in which Cerebrus will acquire Chrysler’s North American auto operations (See   Chrysler to Keep Pension, Health Liabilities).

Also as part of the deal,$18 billion to $19 billion of retirement and health-care liabilities will be folded into a new Chrysler holding company, Chrysler Holding LLC. 

“Both Daimler and Cerberus have made significant financial commitments to strengthen Chrysler pensions,” Snowbarger said in the statement. “Daimler has agreed to provide a guarantee of $1 billion to be paid into the Chrysler plans if the plans terminate within five years. Under its new ownership capitalized by Cerberus, Chrysler will make $200 million in pension contributions over the next five years above and beyond the legally required minimum.”

Snowbarger declared: “I commend both Daimler and Cerberus on their willingness to work with the PBGC to protect the retirement security of Chrysler workers and retirees.”