The Pension Benefit Guaranty Corp. (PBGC) announced that Global Crossing would transfer the plan formerly sponsored by Frontier Corp. to Citizens Communications Co. Citizens purchased Frontier in 2001.
The PBGC said the deal supersedes Global Crossing’s 2002 bankruptcy reorganization proposal that included a proviso to move the pension plan to a liquidating trust. As a result, the PBGC will withdraw its November 25 request to terminate the plan (See PBGC Steps in to Preserve Frontier Benefits ) and instead seek to have the PBGC named trustee.
The PBGC opposed assigning the underfunded plan to the liquidating trust, arguing that the transfer could harm the plan’s 5,500 workers and retirees and the pension insurance program.
“This agreement is a victory for the Frontier pension plan participants and for the pension insurance program that millions of Americans rely on,” PBGC Executive Director Steven Kandarian said in a statement. “The PBGC will act whenever it can to derail arrangements that would dump unfunded pension liabilities on the system at the expense of our premium payers and the retirees we protect.”
The Global Crossing North America Inc. Frozen Pension Plan (formerly called the Frontier Corp. Pension Plan for Non-Bargaining Unit Employees) is still underfunded by about $105 million, according to PBGC estimates, with about $473 million in assets to cover $578 million in liabilities.
Approximately 95% of the plan’s assets and liabilities will be transferred to Citizens, which will assume responsibility for funding the plan. The portion of the plan covering active Global Crossing workers will be continued by the reorganized Global Crossing.