Albertsons Companies Announces Tentative Agreement with UFCW Local Unions Regarding Pension Benefits for Associates
July 21 2020 - 5:04PM
Albertsons Companies, Inc. (NYSE: ACI) announced today that it has
entered into a tentative agreement with the trustees of the United
Food and Commercial Workers International Union (“UFCW”)
Union-Industry Pension Fund (“National Fund”), providing that ACI
will permanently cease to have any obligation to contribute to the
National Fund, a multiemployer pension plan, and will completely
withdraw from the National Fund, effective as of June 30, 2020. ACI
and the UFCW local unions have entered into a Memorandum of
Understanding (MOU) that will instead establish a Variable Annuity
Pension Plan (the “VAPP”), effective as of July 1, 2020, providing
for future security and service benefits for ACI associates. This
agreement will need to be ratified by the membership of each of
these unions before it can take effect.
“We are pleased with this agreement,” said Vivek Sankaran,
President & CEO. “We believe this protects and provides the
right benefits for our employees, while reducing financial risk
going forward.”
Upon ratification of the agreement by nine local UFCW unions,
ACI will pay an aggregate of approximately $286 million to the
National Fund, which will be in full satisfaction of ACI’s
withdrawal liability amount or mass withdrawal liability amount, by
June 30, 2023. ACI will pay this amount in three or four
installments over the next three years, any portion of which may be
prepaid, in whole or in part. Within thirty (30) days of the
establishment of the VAPP, ACI will pre-fund a transition reserve
to support certain grandfathered participants by making a payment
of approximately $8 to $9 million.
ACI and the local unions will establish the VAPP by October 31,
2020. ACI will make monthly employer contributions to the VAPP at
the same monthly rate (or hourly equivalent rate) it had
contributed to the National Fund. Accrued benefits will be subject
to a variable annuity calculation and be adjusted to reflect net
investment returns above or below a hurdle rate of return of 5.5%.
This pension benefit formula fixes the terms of ACI’s projected
future pension costs through June 30, 2028 for these nine local
UFCW unions, lowers ACI’s future financial risk and helps to
protect benefits for our valuable employees.
ACI expects to incur a pre-tax charge of approximately $286
million (or $213 million on an after-tax basis) to record the
withdrawal liability for these benefits earned for prior service.
This charge is expected to be recorded upon ratification of the
agreement, which ACI expects to be in the third quarter of fiscal
2020. This charge will not affect Adjusted EBITDA and
Adjusted net income for fiscal 2020 as those measures exclude
adjustment items such as this contribution.
The Kroger Co. and The Stop and Shop Supermarket Company LLC
have each entered into separate tentative agreements with the
trustees of the National Fund to withdraw from the National Fund
and a separate MOU with UFCW local unions to transition to their
own new variable benefit plan. In addition to the MOU being subject
to (and conditioned on) ratification by ACI associates from nine
local UFCW unions, it is also subject to Kroger and Stop and Shop
obtaining ratification of their respective MOUs providing for their
withdrawals from the National Fund and satisfying all conditions
necessary to permit either of them to participate in their
applicable new variable benefit plan. ACI will only move forward
with this transaction, withdrawing from the National Fund and
transitioning its affected associates to the VAPP, if all of the
above conditions are met.
About Albertsons Companies
Albertsons Companies is one of the largest food and drug
retailers in the United States, with both a strong local presence
and national scale. Albertsons Companies operates stores across 34
states and the District of Columbia under 20 well-known banners
including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom
Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United
Supermarkets, Market Street and Haggen.
Important Notice Regarding Forward-Looking Statements
This press release contains certain forward-looking statements.
Statements that are not historical facts, including statements
regarding Albertsons Companies’ expectations, perspectives and
projected financial performance, are forward-looking statements.
The words “expect,” “believe,” “estimate,” “intend,” “plan” and
similar expressions, when related to Albertsons Companies and its
subsidiaries, indicate forward-looking statements. The
forward-looking statements are based on Albertsons Companies’
current expectations and involve risks and uncertainties,
including, but not limited to, risks and uncertainties regarding
our current expectations and beliefs, other pending transactions
and other future events. Albertsons Companies cautions that actual
results could differ materially from the expectations described in
the forward-looking statements. Albertsons Companies also cautions
that undue reliance should not be placed on any of the
forward-looking statements, which speak only as of the date of this
release. Albertsons Companies undertakes no responsibility to
update any of these forward-looking statements to reflect events or
circumstances after the date of this report or to reflect actual
outcomes. Additional information concerning factors that could
cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in
Albertsons Companies’ filings with the SEC, including its most
recently filed Forms 10-Q and 10-K.
Melissa Plaisance
Albertsons Companies
925-226-5115
melissa.plaisance@albertsons.com
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