An independent federal agency filed Aug. 1 to take control of the underfunded retirement income plan of Kerr Group Inc. in advance of a possible ownership change.
Pension Benefit Guaranty Corp. sued Kerr in U.S. District Court in Philadelphia to take over a pension plan covering 5,600 workers and retirees. The agency estimated the plan has assets of nearly $90 million and benefit liabilities of about $130 million.
The suit has delayed Kerr's pending acquisition by Fremont Partners, a private San Francisco investment firm. In an Aug. 5 press release, intended buyer Fremont Partners said it extended a cash tender offer to midnight Aug. 11 to allow discussions among Fremont, Kerr, holders of Kerr senior indebtedness and the agency to continue.
Fremont said tenders had been received for 79 percent of Kerr's common stock outstanding, or 3,097,682 shares, and 44 percent of preferred stock, or 212,894 shares. The tenders amounted to 67 percent of common stock outstanding on an as-converted, fully diluted basis.
``Continuation of the [retirement] plan remains our goal,'' David M. Strauss, the agency's executive director, said in a release.
The agency said a Fremont acquisition ``would finance a significant portion of the purchase price with debt secured by Kerr assets. This would place PBGC behind other creditors if it has to make claims related to the plan.''
For plans terminating in 1997, the agency's maximum guarantee of basic pension benefits is $2,761.36 a month or $33,130 a year for persons retiring at age 65 or later. The guarantee would fully cover ``most Kerr employees and retirees,'' the agency said.
The agency published the ``notice of determination'' Aug. 1 as an advertisement in the national edition of USA Today; a newspaper in Los Angeles, Kerr's former headquarters city; and other papers circulating in the area of Kerr plant sites in Lancaster, Pa.; Jackson, Tenn.; Ahoskie, N.C.; and Bowling Green, Ky.
Kerr's July 8 filing with the Securities and Exchange Commission said the Kerr Retirement Income Plan Trust owned 368,200 shares, of 9.4 percent of outstanding shares of Kerr common stock.
Lancaster-based Kerr makes plastic packaging products, such as child-resistant and tamper-evident closures, prescription packaging products, jars and other closures and containers. Kerr recorded a loss of $22.3 million on 1996 sales of $107.4 million. Kerr employed 875 as of Dec. 31.