PBGC Works Out Asset Disposition with Kaiser Aluminum

A Kaiser news release Friday said its deal with the Pension Benefit Guaranty Corporation (PBGC) calls for:

• The PBGC to have allowed pre-petition unsecured claims in respect of the three Kaiser-sponsored pension plans that were terminated in the amount of $616 million, which will be resolved in plans of bankruptcy reorganization.
• Kaiser to continue sponsoring specified pension plans for hourly employees at plants in Los Angeles; Tulsa, Oklahoma; Sherman, Texas; and Bellwood, Virginia, and to satisfy the estimated $4.4 million minimum funding standard for these plans.
• The PBGC to have an allowed post-petition administrative claim of $14 million, which is expected to be paid upon the consummation of a plan of US Bankruptcy Court reorganization for the company or the consummation of a plan for its subsidiary, Kaiser Alumina Australia Corporation, whichever comes first.
• In respect of its total pre-petition unsecured claims, PBGC’s cash recovery from proceeds of Kaiser’s sale of its interests in the Alpart alumina refinery in Jamaica and the QAL alumina refinery in Australia will be limited to 32% of the net proceeds distributable to holders of the company’s Senior Notes, Senior Subordinated Notes, and the PBGC.

A US Bankruptcy Court judge in Delaware still has to approve the pact.

The PBGC notified Kaiser in early October that it was assuming responsibility for the Kaiser Aluminum Pension Plan(See  PBGC to Pick up Kaiser Aluminum Pension Plan ).