The settlement has significantly improved the plan’s financial standing, according to the PBGC. It will help preserve the plan and resolves PBGC’s concerns about the plan’s sponsor being sold to a company with fewer financial resources.
The settlement also ends ongoing litigation over the agency’s right to take control of the plan because of inadequate funding. The additional contributions improved the plan’s funding level to about 80% in 2014 from 63% in 2013.
“It was clear to us that the proposed sale put the retirement benefits of nearly 13,000 people in jeopardy, so we moved quickly to get better funding for the plan. We had to threaten to take possession of it in order to get Saint-Gobain to act,” says Sanford Rich, PBGC’s chief of Negotiations and Restructuring, based in Washington, D.C. “Now, because of PBGC’s actions, we have a better funded plan and 13,000 people have a more secure retirement.”
In April 2013, PBGC moved to terminate the plan sponsored by Saint-Gobain Containers (also known as Verallia North America) after the company turned down numerous requests to improve funding levels (see “PBGC to Take Plan of Glass Container Maker”). The agency took this action following a January 2013 agreement by the parent company to sell the Muncie, Indiana-based container maker for $1.7 billion to a unit of Ardagh, a Luxembourg-based glass and metal packaging company. The settlement included Ardagh Group S.A., and Saint-Gobain Corp.
PBGC pressed the parties for better funding because the sale put retirement benefits at risk by moving the plan from a financially strong sponsor to Ardagh, which carries a high level of debt. When the parties declined to provide financial protection for the plan, PBGC took steps to terminate the plan to protect retirement benefits.