WASHINGTON - Michelin N.A. is contributing $30 million more than required by the Pension Benefit Guaranty Corp. in order to fully fund the underfunded pension plans of its Uniroyal Goodrich Tire Co. subsidiary.
In the agreement with the PBGC last week, Michelin N.A., Greenville, S.C., said it would make a one-time cash contribution of $380 million to eight plans.
This is the second largest agreement the PBGC has made through its early warning program, which tracks about 400 companies with underfunded pension plans. The largest was made in March when General Motors Corp. made a $10 billion cash and stock contribution to its pension plan for hourly workers.
"More and more, companies such as Michelin are stepping forward early and working with us to tailor solutions to pension concerns," said Martin Slate, PBGC executive director.
Michelin's parent corporation - Compagnie Generale des Etablissements Michelin, Clermont-Ferrand, France - will contribute $300 million; the remaining $80 million will come from Michelin N.A.'s internal operations.
By the end of the year, and after the contributions are made, the eight Goodrich Uniroyal plans will be merged with Michelin North America's pension plan - which according to 1995 Money Management Directory has about $808 million in assets.
For the most part, Michelin and Uniroyal have common managers, and the cash contribution will be distributed to them. A Michelin spokesman would not how much will be given to each manager, though there will be no manager changes and the Bank of New York will remain the fund's master trustee.
Uniroyal Goodrich, a veteran of the PBGC's top 50 list of underfunded plans, had assets of $540 million and liabilities of $1 billion at the end of 1993. Although Michelin would not release current figures, a spokesman said that after the contribution is made and the Uniroyal plans are merged, the plan will have assets of $1.4 billion and no liabilities. The plan will cover nearly 41,000 workers and retirees.
Uniroyal Goodrich will appear on the PBGC's top 50 list, expected in early December. The PBGC's list will not include contributions made after Sept. 15, 1995, for the 1994 plan year, a PBGC spokeswoman said.
In exchange for making the contribution, the PBGC said it will waive some of Michelin's reporting requirements. Michelin will not have to tell the PBGC about any foreign transaction, except if it breaks up the corporate group relationship with its foreign parent. And as long as it remains 90% funded, the plan will not have to report minor domestic transactions, the PBGC said.
Michelin officials went to the PBGC with the plan in August because its foreign parent wanted to do business transactions without worrying whether it would be violating any U.S. pension laws, a PBGC spokeswoman said.
Through the early warning program, the PBGC has negotiated more than 30 settlements which have provided about $13.8 billion in new pension contributions for more than 1 million workers.
For its efforts with the early warning program, the PBGC recently won $100,000 and was named a winner in the 1995 Innovations in American Government Award by the Ford Foundation and the John F. Kennedy School of Government at Harvard University.
