Sears protects pension fund

Hoffman Estates, Ill. – Sears Holding Corp. is protecting the assets of its pension fund following the creation of its Seritage Growth Properties real estate investment trust (REIT).



The company has entered into a five-year agreement with Pension Benefit Guarantee Corp. (PBGC) to guarantee that it will continue to make required contributions to the fund.



The agreement gives PBGC a “springing lien” on certain assets already held in an existing special purpose subsidiaries holding real estate and/or intellectual property assets. The lien will only be triggered by Sears failing to make scheduled pension payments, makes prohibited transfers of ownership interests, terminates the plan or files for bankruptcy.



Sears said it will continue to make required payments to its pension plan. The amount of the payments will not be affected by the agreements. PBGC will not involuntarily terminate the plan, except in the case of certain specified conditions.



"This agreement results from good faith discussions between the PBGC and the company and is another positive step forward for the company; it provides meaningful protections to the PBGC while preserving the company's financial and operational ability to continue implementing the transformation," said Edward S. Lampert, Sears Holdings' chairman and CEO.



As of Jan. 1, Sears’ U.S. pension fund had $3.62 billion in assets and $5.88 billion in liabilities. Sears froze its pension plan in 2006.