Billionaire Steve Feinberg simply went toe-to-toe with the labor unions — and he blinked.
The secretive boss of Cerberus Capital Management — the buyout fund that owns grocery big Albertsons — has made shock concessions in a deal with the US authorities, agreeing to pay $575 million to shore up an enormous, troubled pension plan masking some 50,000 grocery store employees, sources stated.
Under the first-of-its-kind settlement, the grocery store beginning subsequent 12 months will start paying $23 million a 12 months for 25 years to the Pension Benefit Guaranty Corp. to fund the nest eggs of tens of 1000’s of grocery employees within the mid-Atlantic area, in response to sources and regulatory filings.
The deal — a shocker for watchers of Feinberg, who has been criticized prior to now for federal bailouts of his botched investments in Chrysler and GMAC — comes as Albertsons on Friday filed for an preliminary public providing.
Now, Albertsons shall be paying $19 million extra per 12 months in DC space pension contributions, a union spokesman stated, declining to offer particulars.
Albertsons’ IPO submitting stated it expects to “report a cloth enhance” to its pension-related liabilities in its first quarter on account of the settlement.
The pricey pension concessions are geared toward resolving the grocery store’s prolonged dispute with the United Food and Commercial Workers Union. The union had argued Albertsons’ pension obligations lengthen to retirees past its Safeway shops within the Washington, DC space, which make use of about 10,000.
Albertsons, the union argued, can also be on the hook to assist assist one other 40,000 employees at now-defunct chains within the area akin to Food Fair and Grand Union which might be in the identical multi-employer pension plan.
The $575 million payout masking all 50,000 employees from differing supermarkets eclipses the $131 million in internet earnings Albertsons made in fiscal 2018 on $61 billion in gross sales, insiders famous.
The elevated pension prices signify 15 % of internet earnings.
After union officers had been briefed on the deal, staff at 112 Albertsons-owned Safeway supermarkets in Washington DC, Maryland and Virginia voted Thursday to approve a brand new contract that features elevated wages and pension contributions.
Now underfunded by $1.7 billion, the group pension plan is projected to go bust by 2021.
The deal represents a change of coronary heart for Albertsons, which has been an albatross for Cerberus because the buyout fund acquired it in 2006.
In January, an Albertsons spokeswoman had insisted that the grocery store chain wouldn’t pay the unfunded quantity of the pension plan along with its ongoing contributions.
“That is neither required by regulation nor by any settlement we now have with the union,” the spokeswoman stated.
On Friday, the Albertsons spokeswoman stated, “We don’t touch upon the small print of collective bargaining agreements.”
It has additionally agreed to assist fund pensions for employees at their full profit ranges past the $12,800 annual most the federal government pays employees in bancrupt multi-employer plans.
Albertsons, which hasn’t but revealed how a lot it intends to lift in its NYSE inventory debut, has additionally agreed to make bigger pension contributions in current months to employees in Northern and Southern California, a supply stated.