Propex Pensions Secured by Feds

Chattanooga, TN, March 24, 2009--The federal government moved Monday to secure the pensions for 3,300 workers and retirees of the bankrupt Propex Inc., according to a story in the Chattanooga Times-Free Press.

The Pension Benefit Guaranty Corp. said it will cover most of a projected $20.4 million shortfall in Propex’s two pension plans.

The Chattanooga-based maker of carpet backing and other geotextile products filed for bankruptcy in January 2008 after the market for carpet and construction materials began to sink.

The Propex pensions were funded at only 49 percent of the level needed to meet pension obligations for current and future retirees, PBGC analysts said.

“The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans,” PBGC said in a statement Monday.

The biggest business for Propex is carpet backing and that business is off at least 30 percent from its peak levels.

Propex acquired the former Amoco BP in 2004 and was headed until a year ago by former SI Corp. President Joe Dana. The company has major operations in Chattanooga, Ringgold, Ga., Nashville, Bainridge, Ga., and Hazlehurst, Ga.

Propex’s pension plans have combined assets of $40.6 million, or $20.4 million less than benefit liabilities, PBGC said.

In a hearing Monday in Chattanooga, Judge Cook cleared the way for another bid from the creditors for Propex organized by Black Diamond Capital Management Inc.

Representatives for the potential bidders said they expect the sale to generate only a portion of the company’s $230 million of secured debt, however.