Laidlaw, scheduled to emerge from bankruptcy in 2003, will contribute $150 million more to the pension plans by the end of 2004 than required by law, under the terms of the agreement. Upon emerging from bankruptcy, the company will make pension contributions of $50 million, followed by $50 million in June 2004, and another $50 million no later than the end of 2004.
As security for the installments, the PBGC will hold a lien on most of Laidlaw’s assets. Additionally, the company will be required to keep the pension plans’ funding level $150 million above the minimum required by law for a minimum of five years and until the company’s debt becomes investment grade, according to terms of the agreement.
The agreement is a product of the PBGC’s Early Warning Program under which the agency monitors companies with underfunded pension plans and negotiates protections when transactions put workers’ pensions or the federal pension insurance program at risk.
With the seven Greyhound pension plans underfunded by $388 million, according to PBGC estimates, the agency determined that the plans needed additional protection.
Pension plans to receive the additional funding are:
- Greyhound Lines, Inc Salaried Employees Defined Benefit Plan
- Greyhound Inc Amalgamated Transit Union Local 1700 Council Retirement & Disability Plan
- Texas New Mexico and Oklahoma Coaches, Inc Employees Retirement Plan
- Vermont Transit Co Inc Employees Defined Benefit Pension Plan
- Carolina Coach Co Pension Plan
- Carolina Coach Co International Association of Machinists Pension Plan
- Carolina Coach Co Amalgamated Transit Union Pension Plan.