SPRINGDALE, Ark. -- The trustees for Tyson Foods Inc.'s $80.6 million profit-sharing plan are seeking a prohibited-transaction exemption letting the plan sell to Tyson property owned by the plan.
The exemption, which would be retroactive, would allow the sale back to Tyson of four chicken hatcheries and other properties owned by the plan in order to convert illiquid assets into cash.
Tyson froze and discontinued its profit-sharing plan in 1991 and replaced it with a 401(k) plan, a Tyson official said.
The trustees of the original plan want the cash to make the final payouts to the 4,934 employees who participated in the profit-sharing plan.
Tyson runs a $150 million 401(k) plan, according to the Tyson official, who said the plan offers six options: a guaranteed investment contract managed by PRIMCO Capital Management Inc., Louisville; and five equity options run by PaineWebber, New York.
According to the 1997 Money Market Directory, the profit-sharing plan was managed internally.
The official declined to discuss the exemption request in detail or the reasons for the conversion of the profit-sharing plan; the comment period ends May 1.
Barring any comments opposing it, the exemption will be effective retroactively to May 23, 1997.
According to papers filed with the Department of Labor Department, the hatcheries, a corporate office complex and a freezer facility were acquired by the profit-sharing plan from Tyson in various transactions between 1966 and 1992. After each of the properties was acquired by the plan, they were leased back to Tyson.
On May 23, 1997, the company bought back all of the properties for $33 million. The properties had made up 32% of the plan's assets. Tyson officials declined to detail the rest of the investments in the profit-sharing plan.
The profit-sharing plan hired Arthur Andersen LLP, Atlanta, to act as an independent fiduciary on its behalf. In its report, Andersen officials stated the sale of the properties to Tyson for $33 million was in the best interests of the plan and its participants.
Ivan Strasfeld, director of exemption determinations at the Labor Department's Pension and Welfare Benefits Administration, said the plan had satisfied the necessary requirements for a prohibited transaction exemption because an independent fiduciary had determined the transaction was in the best interests of the plan and its participants prior to the sale; all terms of the transaction were at least as favorable to the plan as those the plan could obtain from an unrelated party; the sale was a one-time cash transaction; the plan paid no commissions or other expenses relating to the sale; and the purchase price was the greater of the fair market value of each of the properties as determined by an independent appraiser or the plan's original acquisition cost.