[Federal Register Volume 59, Number 80 (Tuesday, April 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10068]


[[Page Unknown]]

[Federal Register: April 26, 1994]


=======================================================================
-----------------------------------------------------------------------

PENSION BENEFIT GUARANTY CORPORATION

 

Pendency of Request for Exemption From the Bond Escrow 
Requirement Relating to the Sale of Assets by an Employer who 
Contributes to a Multiemployer Plan; Home Team Limited Partnership

AGENCY: Pension Benefit Guaranty Corporation..

ACTION: Notice of pendency of request.

-----------------------------------------------------------------------

SUMMARY: This notice advises interested persons that the Pension 
Benefit Guaranty Corporation has received a request from The Home Team 
Limited Partnership for an exemption from the bond/escrow requirement 
of section 4204(a)(1)(B) of the Employee Retirement Income Security Act 
of 1974, as amended, with respect to the Major League Baseball Players 
Benefit Plan. Section 4204(a)(1) provides that the sale of assets by an 
employer that contributes to a multiemployer pension plan will not 
result in a complete or partial withdrawal from the plan if certain 
conditions are met. One of these conditions is that the purchaser post 
a bond or deposit money in escrow for the five-plan-year period 
beginning after the sale. The PBGC is authorized to grant individual 
and class exemptions from this requirement. Before granting an 
exemption the PBGC is required to give interested persons an 
opportunity to comment on the exemption request. The purpose of this 
notice is to advise interested persons of the exemption request and 
solicit their views on it.

DATES: Comments must be submitted on or before June 10, 1994.

ADDRESSES: All written comments (at least three copies) should be 
addressed to: Pension Benefit Guaranty Corporation, Office of the 
General Counsel, 1200 K Street, NW., Washington, DC 20005-4026, or 
hand-delivered to suite 340 at the above address between 9 a.m. and 4 
p.m., Monday through Friday. The non-confidential portions of the 
request for an exemption and the comments received will be available 
for public inspection at the PBGC Communications and Public Affairs 
Department, suite 240, at the above address, between the hours of 9 
a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Karen L. Morris, Office of the General 
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., 
Washington, DC 2005-4026; telephone 202-326-4127 (202-326-4179 for TTY 
and TDD). These are not toll-free numbers.

SUPPLEMENTARY INFORMATION:

Background

    Section 4202 of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980 (``ERISA'' or ``the Act''), provides that a bona fide arm's-length 
sale of assets of a contributing employer to an unrelated party will 
not be considered a withdrawal if three conditions are met. These 
conditions, enumerated in section 4204(a)(1)(A)-(C), are that--
    (A) The purchaser has an obligation to contribute to the plan with 
respect to the operations for substantially the same number of 
contribution base units for which the seller was obligated to 
contribute;
    (B) The purchaser obtains a bond or places an amount in escrow, for 
a period of five plan years after the sale, in an amount equal to the 
greater of the seller's average required annual contribution to the 
plan for the three plan years preceding the year in which the sale 
occurred or the seller's required annual contribution for the plan year 
preceding the year in which the sale occurred (the amount of the bond 
or escrow is doubled if the plan is in reorganization in the year in 
which the sale occurred); and
    (C) The contract of sale provides that if the purchaser withdraws 
from the plan within the first five plan years beginning after the sale 
and fails to pay any of its liability to the plan, the seller shall be 
secondarily liable for the liability if (the seller) would have had but 
for section 4204.
    The bond or escrow described above would be paid to the plan if the 
purchaser withdraws from the plan or fails to make any required 
contributions to the plan within the first five plan years beginning 
after the sale.
    Additionally, section 4204(b)(1) provides that if a sale of assets 
is covered by section 4204, the purchaser assumes by operation of law 
the contribution record of the seller for the plan year in which the 
sale occurred and the preceding four plan years.
    Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty 
Corporation (``PBGC'') to grant individual or class variances or 
exemptions from the purchaser's bond/escrow requirement of section 
4204(a)(1)(B) when warranted. The legislative history of section 4204 
indicates a Congressional intent that the sales rules be administered 
in a manner that assures protection of the plan with the least 
practicable intrusion into normal business transactions. Senate 
Committee on Labor and Human Resources, 96th Cong., 2nd Sess., S. 1076, 
The Multiemployer Pension Plan Amendments Act of 1980: Summary and 
Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong. Rec. 
S10117 (July 29, 1980). The granting of an exemption or variance from 
the bond/escrow requirement does not constitute a finding by the PBGC 
that a particular transaction satisfies the other requirements of 
section 4204(a)91). Such questions are to be decided by the plan 
sponsor in the first instance, and any disputes are to be resolved in 
arbitration. 29 U.S.C. 1382, 1399, 1401.
    Under the PBGC's regulation on variances for sales of assets (29 
CFR part 2643), a request for a variance or waiver of the bond/escrow 
requirement under any of the tests established in the regulation (29 
CFR 2643.12-2643.14) is to be made to the plan in question. The PBGC 
will consider waiver requests only when the request is not based on 
satisfaction of one of the four regulatory tests or when the parties 
assert that the financial information necessary to show satisfaction of 
one of the regulatory tests is privileged or confidential financial 
information within the meaning of 5 U.S.C. 552(b)(4) (the Freedom of 
Information Act).
    Under section 2643.3 of the regulation, the PBGC shall approve a 
request for a variance or exemption if it determines that approval of 
the request is warranted, in that it--
    (1) Would more effectively or equitably carry out the purposes of 
Title IV of the Act; and
    (2) Would not significantly increase the risk of financial loss to 
the plan.
    Section 4204(c) of ERISA and Sec. 2643.3(b) of the regulation 
require the PBGC to publish a notice of the pendency of a request for a 
variance or exemption in the Federal Register, and to provide 
interested parties with an opportunity to comment on the proposed 
variance or exemption.

The Request

    The PBGC has received a request from The Home Team Limited 
Partnership (``the Buyer'') for an exemption from the bond/escrow 
requirement of section 4204(a)(1)(B) with respect to its purchase of 
The Orioles, Inc. (``the Seller'') on October 4, 1993. In support of 
the request, the Buyer represents among other things that:
    1. The Major League Baseball Players Benefit Plan (the ``Plan'') 
was established and is maintained pursuant to a collective bargaining 
agreement between professional major league baseball teams and the 
Major League Baseball Players Association.
    2. The Seller was a participating employer in the Plan.
    3. The major league clubs have established the Major Leagues 
Central Fund (the ``Central Fund'') pursuant to the ``Major League 
Agreement in re Major Leagues Central Fund.'' Under this agreement, 
contributions to the Plan for all participating employers are paid by 
the Office of the Commissioner of Baseball from the Central Fund on 
behalf of each participating employer in satisfaction of the employer's 
contribution obligation arising under the Plan's funding agreement. The 
monies in the Central Fund are derived directly from (i) gate receipts 
from All-Star games, (ii) radio and television revenues from World 
Series, League Championships, intradivision play-offs and All-Star 
games, and (iii) certain other radio and television revenues from 
regular and exhibition games, including revenues from foreign 
broadcasts.
    4. For the Plan year ended March 31, 1993, the Central Fund 
contributed approximately $34.1 million to the Plan on behalf of the 
Clubs; 1/26 of that amount represented contributions paid on behalf of 
the Seller.
    5. The Buyer and the Seller entered into an Asset Purchase 
Agreement for the Buyer to purchase substantially all of the assets and 
assume substantially all of the liabilities of the Seller relating to 
the business employing the employees covered by the Plan. The final 
closing of the transaction occurred on October 4, 1993 (the 
``Closing'').
    6. Under the Asset Purchase Agreement, the Buyer assumed the 
obligation to contribute to the Plan for substantially the same number 
of contribution base units as the Seller was obligated to contribute to 
the Plan.
    7. The Asset Purchase Agreement further provided that:

    [I]f the Buyer thereafter, but prior to the end of the fifth 
plan year commencing after Closing, partially or completely 
withdraws from the Plan, Seller shall be and remain secondarily 
liable for any withdrawal liability it would have had to the Plan 
but for the operation of ERISA section 4204.

    8. The amount of the bond/escrow that would be required under 
section 4204 (a)(1)(B) of ERISA beginning as of April 1, 1994, is 
$1,401,449, and the estimated amount of the withdrawal liability that 
the Seller would incur if not for section 4204 is $7,672,235.
    9. In support of the waiver request the Buyer states that:

    The Plan is funded directly from the Revenues which are paid 
from the Central Fund directly to the [Plan's] Trust without first 
passing through the hands of any of the Employers. Therefore, the 
Plan enjoys a substantial degree of security . . . . A change in 
ownership of an Employer does not affect the obligation . . . to 
fund the Plan . . . . Nor does a change in ownership in any way 
create the possibility that there will be difficulty in collecting 
Plan contributions due from any new Employer.

    10. The Buyer has sent by certified mail, return receipt requested, 
a complete copy of the request to the Plan and the collective 
bargaining representative.

Comments

    All interested persons are invited to submit written comments on 
the pending exemption request to the above address. All comments will 
be made a part of the record. Comments received, as well as the 
relevant non-confidential information submitted in support of the 
request, will be available for public inspection at the address set 
forth above.

    Issued at Washington, DC, on this 20th day of April, 1994.
Martin Slate,
Executive Director.
[FR Doc. 94-10068 Filed 4-25-94; 8:45 am]
BILLING CODE 7708-01-M