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Compliance November 9, 2017
Sears Allowed to Sell Real Estate to Fund Pension
According to a Sears announcement, following the making of a $407 million contribution, it will be nearly relieved of the obligation to make further contributions to the pension plans for approximately two years.
Reported by Rebecca Moore
The Pension Benefit Guaranty Corporation (PBGC) and Sears Holdings Corporation have entered into an amendment to their March 2016 Pension Plan Protection and Forbearance Agreement for the company’s two pension plans. The pension plans cover about 100,000 participants.
The amendment, which is expected to close in approximately three months, provides for the release of approximately 140 Sears properties from a ring-fence arrangement created under the 2016 agreement upon, and in exchange for, the payment of approximately $407 million into the Sears pension plans. Sears Holdings expects to raise the $407 million through a sale of properties and/or financing secured by the properties, with such financing to be repaid from the proceeds of sales of the properties over the next two years. Sears is also required to make the approximately $37 million quarterly payment due to the pension plans in December 2017.
The non-real estate related pension protections in the March 2016 agreement are unaffected by the new agreement.
Following the making of the $407 million contribution, Sears will be relieved of the obligation to make further contributions to the pension plans for approximately two years (other than a $20 million supplemental payment due in Q2 2018), and the remaining properties will no longer be ring-fenced.
Earlier this year, PBGC and Sears amended the March 2016 agreement to accommodate the sale of the Craftsman brand.« SURVEY SAYS: Which provision of the tax reform proposal would be MOST beneficial to retirement savers?