BOISE, Idaho, Nov. 30, 2020 (GLOBE NEWSWIRE) -- Albertsons Companies, Inc. (NYSE: ACI), announced on July 21, 2020 that it had entered into a tentative agreement with the trustees of the United Food and Commercial Workers International Union (“UFCW”) Union-Industry Pension (“National Fund”) to completely withdraw from the National Fund effective as of June 30, 2020 and entered into a Memorandum of Understanding (“MOU”) with nine UFCW local unions to establish a Variable Annuity Pension Plan (the “VAPP”), effective as of July 1, 2020, providing for future service and benefits for Albertsons Cos. associates. This agreement needed to be ratified by the nine local unions. Albertsons Cos. announced today that the Agreement and MOU have been ratified by all nine UFCW local unions.
“We are pleased with this agreement and value our partnership with UFCW to reach this positive outcome,” said Vivek Sankaran, President & CEO. “We believe this protects past benefits earned and will provide quality future benefits for our employees, while reducing financial risk going forward.
As announced on July 21, with the ratification of this agreement, Albertsons Cos. will pay an aggregate of approximately $286 million to the National Fund, which will be in full satisfaction of Albertsons Cos. withdrawal liability amount or mass withdrawal liability amount, by June 30, 2023. This amount will be paid in three 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, Albertsons Cos. will pre-fund a transition reserve to support certain grandfathered participants by making a payment of approximately $8 million.
The established VAPP will receive monthly employer contributions from Albertsons Cos. 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.
Albertsons Cos. will record a pre-tax charge of approximately $286 million to record the withdrawal liability for these benefits earned for prior service 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. On an after-tax basis the charge will total approximately $213 million.
The Stop and Shop Supermarket Company LLC and The Kroger Co. have each entered into separate agreements with the UFCW local unions to withdraw from the National Fund.
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.