Cerberus Capital Management and Daimler have agreed to provide additional protection to Chrysler’s pension plans, says the Pension Benefit Guaranty Corporation(PBGC).
Last spring the PBGC initiated discussions with Daimler and the private equity firm that led to their agreement.
The pension plans will receive an infusion of US$200 million in extra contributions, and Daimler will provide a $1 billion guarantee for up to five years.
“As the insurer of America’s pension plans, the PBGC will continue to negotiate protection for workers and retirees in transactions like this one,” says Charles E.F. Millard, the agency’s interim director. “This transaction provides significant protection to the defined benefit insurance system and its stakeholders.”
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In May, Cerberus reached an agreement to acquire an 80.1% stake in Chrysler from Daimler.
As part of the deal, the private equity firm agreed to take on most of Chrysler’s $18 billion in pension and healthcare obligations from Daimler.
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