Montgomery Ward Holding Corp., Chicago, might terminate its $1 billion pension plan and use surplus assets to help pay creditors.
The company, which filed Chapter 11 bankruptcy July 7, has $270 million in surplus pension assets. In addition to paying creditors, observers expect Ward's would create a successor plan and use the remaining surplus, after taxes, for the new plan.
David Comstock, senior investment analyst with the Signature Group, Schaumburg, Ill., which oversees the pension fund, wouldn't comment. But bankruptcy lawyers and other experts say Ward's creditors probably will push Ward's to terminate the plan.
Sears Roebuck & Co., Chicago, will outsource the administration of its $1.8 billion defined benefit plan to Wellspring Resources, a joint venture between State Street Global Advisors and Watson Wyatt Worldwide. Investment management is not affected.
Sears earlier selected SSgA as bundled provider for its $4.6 billion 401(k) plan. Sears reportedly is seeking to expand its investment options from five to eight. The 401(k) plan is currently managed internally.
The Zeneca Group PLC pension fund hired First Quadrant in London to provide an innovative protection strategy for the £1.7 billion ($2.84 billion) fund.
The TAA strategy is tied to new minimum funding requirements created by the 1995 Pensions Act. Under the approach, First Quadrant will provide an overlay, protecting the fund against downside volatility from the more short-term-oriented MFR test while not upsetting the fund's more long-term asset mix.
In addition, Zeneca's treasury department will purchase out-of-the-money options to protect against catastrophic risk.
Washington State Investment Board, Olympia, formed a joint venture with real estate manager PAC Trust and boosted its venture capital allocation.
The $40 billion fund will contribute $235 million to PAC SIB, the real estate deal. Funding will come from a Copley Real Estate commingled portfolio liquidated last year, said James Parker, executive director. PAC Trust already ran $193 million for the board. Pension Consulting Alliance assisted.
The board also will allocate an additional $100 million each to venture capital managers Pathway Capital and Sovereign Financial Services, bringing their totals to $225 million and $175 million, respectively.
E.I. du Pont de Nemours & Co.'s pension fund and the endowment for the Massachusetts Institute of Technology are among the tax-exempt institutional investors in the Direct Investment Fund sponsored by Littlejohn & Co. Officials with Du Pont and M.I.T. declined to reveal the amounts each invested.
The fund will take positions in companies in the $100 million to $300 million revenue range that can benefit from restructuring or are part of a consolidating or restructuring industry. The fund will close at $230 million.
Delmarva Power and Light Co., Wilmington, Del., and Atlantic Energy Inc., Pleasantville, N.J., are looking at merging their defined benefit plans. The companies themselves are expected to be merged by the end of the year.
The possible joining of Delmarva's $750 million plan and Atlantic's plan is prompting fund officials to look at designing a new, larger plan, said William Mackey, manager of investments and compliance at Delmarva.
Human resource and financial group staff are looking at the state of the plans, said Clifford Groh, manager, risk management for the $225 million Atlantic plan. The same is being done with the companies' defined contribution plans. Watson Wyatt is assisting.
TRW Inc., Cleveland, revamped its $2.4 billion 401(k) plan, hiring Putnam Investments as bundled provider.
New options are Putnam Income Fund, George Putnam Fund of Boston, Putnam S&P 500 Fund, Putnam Investors Fund, Putnam Russell 2500 Index Fund, Sanford Bernstein International Equity Fund and PBHG Growth Fund. A stable value fund from PRIMCO and the TRW company stock fund were retained.
Putnam replaces Bankers Trust as record keeper. Bankers also had been manager for S&P 500 and Russell 2500 index funds and a bond index fund. TRW now is Putnam's biggest 401(k) client. Callan assisted.
Air Touch Foundation, San Francisco, hired Barclays Global Investors to manage assets in a strategy that combines a core indexed approach with alpha strategies, said Diane Paul, global communications director at Barclays. Neither the size of the portfolio nor the size of the foundation could be learned.
International Brotherhood of Electrical Workers, Local #1 Pension Benefit Trust Fund, St. Louis, hired Putnam Institutional to run $33 million in a balanced portfolio for the employer-directed piece of its $345 million defined contribution plan.
The plan hired three other firms, which Floyd Davis, administrative manager, would not identify. The assets had been run by the trustees. Asset Consulting assisted