CalPERS in energy deal
The $126 billion California Public Employees' Retirement System committed $500 million to Enron II, a $1 billion partnership that will invest worldwide in natural gas, crude oil and electricity properties. Enron Corp. committed the other 50%.
Enron II, in partnership with the Ontario Teachers' Pension Plan Board, already has purchased a 7% common equity interest in Enron Energy Services. Enron Energy will market natural gas, electric power and related services.
The investment is CalPERS' second with Enron Corp. The first, Joint Energy Development Investments, formed in 1993, recently concluded. That $250 million investment, said a CalPERS spokesman, scored a 23% internal rate of return.
Supreme Court next?
A longstanding class-action suit by a group of General Motors early retirees, claiming they were promised lifetime retiree medical benefits, appears to be headed to the U.S. Supreme Court.
The 6th U.S. Circuit Court of Appeals this month reversed a lower court finding that GM had promised lifetime medical benefits to a group of 50,000 early retirees. The appeals court said GM clearly had reserved the right to amend its retiree medical plan.
Attorneys for the retirees said they plan to appeal the decision to the U.S. Supreme Court.
AIMR standards revealed
The Association for Investment Management and Research proposed new standards governing soft-dollar arrangements between money managers and brokerage firms.
Under the proposal, the definition of soft-dollar arrangements would be expanded to include proprietary research provided by large Wall Street brokerage firms in exchange for securities trades; trades in which brokerages make money based on the spread between the selling and buying prices of securities; and products and services that help money managers make investment decisions.
The proposed standards would not require money managers to give clients annual information regarding their soft-dollar brokerage practices, but would let clients have such information upon request.
Equity approval eyed
The West Virginia Investment Management Board hopes to approve Jan. 23 its first stock investments. The fund will invest "several hundred million" dollars passively, said David Gardner, investment committee chairman. The board oversees $5.5 billion, including a $2.96 billion pension fund.
PGGM seeks re-hearing
PGGM, the second largest Dutch pension fund, has petitioned a federal appeals court in Washington to re-hear its case that it should qualify as a tax-exempt labor organization. If the U.S. Court of Appeals for the District of Columbia declines to re-hear the case, the Dutch multiemployer hospital workers' pension fund intends to ask the Supreme Court to settle its dispute with the IRS, said K. Peter Schmidt, an attorney representing PGGM.
At stake for the pension fund is an $8.5 million refund for U.S. taxes it paid on earnings on U.S. investments in 1993.
Insurers may get break
The Labor Department issued a proposal to protect insurance companies from being subject to ERISA for plan assets invested in their central investment pools.
Under the proposal, insurers would be required to tell clients how they plan to allocate expenses and income among the commingled investments. Insurance companies also would have to let pension plans withdraw the investments and allow them to take the money as a lump sum or over a five-year period with interest.
The proposal, which would implement part of a federal law passed last year, covers pension plan investments made in insurance companies' general accounts before Dec. 31, 1998.
The $80 million Birmingham (Mich.) Employees' Retirement System reallocated its U.S. equity portfolio among existing managers following a search for a large-cap value manager.
The fund will give Munder Capital about $18 million in the new large-cap value mandate and a $9 million core small-cap portfolio. Munder previously managed a large-cap growth portfolio for the system. A large cap-growth portfolio run by MacKay Shields will be reduced.
Suit gains ally
Connecticut state officials, Paul Silvester, treasurer; and Richard Blumenthal, attorney general, will join 12 pension funds suing officers of Columbia/HCA Healthcare Corp.
The state cannot join the pension funds' suit because one defendant is from Connecticut; plaintiffs and defendants must be from different states in federal lawsuits not based on federal law issues. However, Connecticut will have input on the litigation. The funds seek to recoup profits Columbia/HCA officers made from selling their stock, after allegedly abusing their authority.
The $17 billion State of Connecticut Retirement & Trust Funds owns 1.3 million shares of Columbia, valued at $37.4 million.
Fund hires Templeton
The $212 million Massachusetts Port Authority Employees' Retirement System hired Templeton Investment Counsel for a $20 million broad international equities portfolio. Funding came from a $10.4 million allocation to a now-closed international equities commingled fund and reallocations from other asset classes.
Pillowtex, PBGC agreement
Pillowtex has agreed to continue making annual contributions to the two underfunded pension plans of Fieldcrest Cannon as part of an agreement with the PBGC.
Pillowtex is acquiring Fieldcrest Cannon, whose underfunded plans cover 26,000 workers and retirees. Pillowtex is giving the PBGC a $15 million bank letter of credit and a $25 million lien on its manufacturing plants and equipment as a backup in case the company runs into problems and is forced to shut the pension plans.
Plan OK, PBGC says
The PBGC ruled that Kane Transfer's withdrawal from the Freight Drivers and Helpers Union Local 557 Pension Fund did not hurt the plan.
The trucking industry union pension fund had asked the PBGC to declare that Kane, and other trucking employers' decision to stop contributions to the pension fund, had "resulted in substantial damage." Kane ceased contributions in December 1993. A total of 29 employers withdrew between 1986 and 1994.
White Cap taps Amex
White Cap Inc. hired American Express as a bundled provider for its $61 million defined contribution plan, replacing Northern Trust as trustee and Mercer as record keeper.