After months of wrangling, New Valley Corp. agreed to sell Western Union Financial Services along with its underfunded pension plan to First Financial Management Corp., Atlanta.
First Financial agreed to pay $893 million for Western Union and assume the New Valley plan, which the Pension Benefit Guaranty Corp. estimates has a $389 million unfunded liability.
Creditors and a federal bankruptcy court in New Jersey must give final confirmation.
Earlier, First Financial proposed - and the federal bankruptcy court agreed - to pay $1.2 billion for Western Union, without assuming the unfunded liability. And New Valley had agreed to make a one-time $211.6 million payment to the plan, and to hold $53.4 million in escrow.
The PBGC didn't like this proposal, saying it didn't provide enough protection to the pension plan. The pension plan would have remained with New Valley, Upper Saddle River, N.J., which would have been a corporate shell, PBGC executives complained. When the PBGC threatened to terminate the plan, First Financial agreed to assume the pension liability.