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

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.

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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