Magnetek, Inc. (“Magnetek” or “the Company”)(NYSE: MAG) announced today that the Company received conditional approval of its request for a waiver of the minimum funding requirements of the Company’s defined benefit pension plan (the “Plan”) for the 2011 plan year. The amount of the funding waiver requested was approximately $17 million, scheduled to be funded in quarterly installments from April 2011 through January 2012, with a final installment due in September 2012.
The Internal Revenue Service (“IRS”) informed the Company that the agency is prepared to grant the waiver request subject to the following conditions:
- The Company agrees to resume its required quarterly contributions in a timely manner beginning April 15, 2012.
- The Company makes contributions to the Plan sufficient to meet the minimum funding requirements for the Plan years 2012 through 2016.
- The Company provides collateral acceptable to the Pension Benefit Guarantee Corporation (“PBGC”) for the full amount of the 2011 plan year waiver.
The Company has confirmed its acceptance of these conditions in writing to the IRS, and accordingly anticipates receiving final notification of the waiver approval in the near future. As a result, the Company currently expects that the 2011 plan year scheduled contributions of $17 million will be deferred and amortized with interest over plan years 2012 through 2016.
The waiver application was filed in February 2011 and, in accordance with the funding rules, the Company did not make its scheduled contributions in April, July, and October 2011 in an aggregate amount of more than $10 million. Based upon receipt of the waiver, the Company can now also defer contributions scheduled for January and September 2012 in an aggregate amount of nearly $7 million. The Company did make a cash contribution of $1.9 million to the Plan in September 2011, which represented the final amount due for plan year 2010.