The companies that bought General Motors Acceptance Corp. required the PBGC agree that the motor company would not carry any of the responsibility for the pension plan, the Associated Press reports. The buyers agreed in April to take over a 51% stake in GM’s finance arm for $14 billion. Cerebrus Capital Management heads the consortium of buyers, which include Citigroup Inc. and Aozora Bank.
The auto maker solidified the deal with the nation’s private pension insurer in a filing with the Securities and Exchange Commission on Thursday.
PBGC spokesman Randy Clerihue told the AP that the agency was glad GM did not attempt to use the sale of GMAC to circumvent its pension responsibilities.
At one point, the PBGC pegged GM’s pension liabilities at $31 billion, but that figure has improved because of higher interest rates, according to the news report.
GM said its pension liability at the end of 2005 was $10.9 billion; however, the company announced in March pension restructuring plans to help it reduce costs (See GM Unveils Finalized Pension Restructuring ). By restructuring its pension programs in a way that mimics ongoing DB to DC trends throughout the economy, the ailing carmaker said the changes would cut its year-end 2006 pension liability by about $1.6 billion and result in a pre-tax charge of about $120 million.
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