A PBGC news release said Fraser Papers, of Madawaska, Maine, is a wholly-owned U.S. subsidiary of Toronto-based Fraser Papers Inc. (FPI) that is also in bankruptcy. The U.S. unit operated pulp and paper mills in Maine and New Hampshire.
The PBGC stepped in because the underfunded pension plan would have been abandoned after FPI, in liquidation, sold substantially all operating assets to a group of creditors in a transaction that did not include the pension plan. The plan was frozen for salaried employees as of October 31, 2009, and for bargaining unit employees as of April 28, 2010.
The Pension Plan for the Eligible Employees of Fraser Papers Limited is 44% funded, with about $83 million in assets and $187 million in benefit liabilities, according to PBGC estimates. The agency expects to cover about $99 million of the $104 million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which terminated as of April 28, 2010. The PBGC became trustee of the plan August 31, 2010.
Assumption of the plan’s unfunded liabilities will increase the PBGC’s claims by $98.6 million and was not previously included in the agency’s fiscal year 2009 financial statements.
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