CHICAGO - Ameritech's 26-person pension and investment management unit will be shut down on Dec. 31 and the $22 billion in employee benefit assets transferred to Texas, sources said.
Until then, however, day-to-day investment management decisions will be made by the investment staff at Ameritech's new owner, SBC Communications Inc., San Antonio, the sources said.
"Essentially the (Ameritech pension) staff will become full-time job hunters between now and the end of the year," said a source familiar with the situation.
Ameritech's top pension officers were informed of the plans by Roger W. Wohlert, managing director of finance at SBC. Mr. Wohlert's visit to Ameritech last week came just days after the $75 billion megamerger of the two telecom giants was finalized.
Mr. Wohlert declined to comment. Sue Manske, Ameritech's chief investment officer, did not return phone calls seeking comment.
One Ameritech pension staffer said the only official news given to employees so far is that the pension assets would be transferred to Texas.
He said he and his colleagues were waiting to see if they would be offered jobs in Texas. He said they expected to be called in one by one and told their fate.
Still, the decision shouldn't surprise Ameritech's investment staffers, since SBC has followed essentially the same pension script in previous mergers and acquisitions.
SBC gobbled up the $16.8 billion in pension assets at Pacific Telesis Group in 1997 and $1.7 billion in pension assets at Southern New England Telecommunications, New Haven, Conn., in October 1998. In each case, SBC took command of the assets and fired the investment staff.
At San Francisco-based PacTel however, SBC did ask three of top in-house managers to form a money management firm that would invest in private and public equities for the combined pension plan. The firm, McGahan, Greene, McHugh Capital Management LLC, San Francisco, manages $2 billion for SBC.
But SBC fired the remaining staff of 13 responsible for investments and administration. And at Southern New England, the investment executives were handed pink slips earlier this year. There is no longer any pension staff in New Haven, said Beverly Levy, spokeswoman at Southern New England.
Money managers who invest for the two pension giants are nervous about the merger, because they know they will be re-evaluated in light of the new combination.
An investment manager involved with the PacTel merger said SBC retained many of the PacTel managers and fired some of the SBC managers. "They drew up a plan that would be the best combination for them. Ultimately, they kept more managers than they fired," he said.
In an interview before his trip to Chicago, Mr. Wohlert said: "I don't know how the plans will be merged until I sit down with the people at Ameritech and look at the real numbers. It depends what we find."
He said he expects the plans will be merged in the first quarter of 2000. As of June 30, SBC's total defined benefit assets stood at $28 billion.
Ameritech's asset allocation is around 20% fixed income, 40% U.S. equities, 20% international equities, 12% real estate, 6% private equity, with the remainder in cash, according to someone familiar with the plan. All of the fixed-income assets, which are mainly domestic, are internally managed, while the other asset classes are managed externally, a source said.
The source believes Ameritech is more aggressive in alternative investing than SBC. "If they were going to ask anyone to stay, it might have been (Ameritech's) Julie O'Donnell, who oversees the alternative investment portfolios and is highly regarded," he said.
As of June 30, SBC's allocation is 59% domestic equities; 14% international equities; 24% fixed income; and 3% real estate, Mr. Wohlert said. All SBC assets are managed externally.