The PBGC announced Wednesday that it is taking over the defined benefit plan of coal producer Walter Energy Inc., Birmingham, Ala.
The Pension Plan for Salaried Employees of Walter Energy Inc. Subsidiaries, Divisions and Affiliates is 70% funded, with $219 million in assets to cover $315 million in benefits. The PBGC is expected to cover the $96 million shortfall for the plan, which will be terminated Thursday.
The company is restructuring through bankruptcy court, which will oversee an auction of company assets in January. In November, Walter Energy entered into an asset purchase agreement with an entity formed by the company’s senior lender group, which does not intend to assume the pension plan.
On Monday, U.S. Bankruptcy Court Judge Tamara Mitchell in Birmingham allowed the company to terminate its collective bargaining agreements with the United Mine Workers of America, and stop paying pension and health-care benefits.
In a statement, UMWA President Cecil Roberts called the decision “extremely disappointing but not surprising,” and said the union will continue to negotiate with the company.
Walter Energy spokesman William Stanhouse declined to comment.