Cerberus not liable for GM pension plan

The Cerberus-led consortium set to purchase GMAC will not be held liable for the troubled automaker’s pension obligations.

The Pension Benefit Guaranty Corp. will not hold General Motors Acceptance Corp., the financing arm of US auto manufacturer General Motors, responsible for employee benefit plans, removing a major hurdle in the sale, according to a GM regulatory filing on Thursday.

The investor consortium led by Cerberus Capital Management – a private investment firm headquartered in New York – set to buy the unit for $14 billion (€11 billion) had set such an assurance as a condition for successful closure of the deal. The Cerberus-led group agreed to buy a 51 percent stake in GMAC in April.

The consortium received a letter from the PBGC saying the federal pension insurer will not terminate GM’s pension plans or transfer any liability for the plan to the GMAC buyers.

The high-profile deal would include a $6 billion contribution from Cerberus. Although additional purchase stipulations and regulatory approvals must be met before the deal is finalised, if it goes through Cerberus would control the seventh-largest financial institution in the US based on assets.

The investor consortium also includes Citigroup, Aozora Bank, and a subsidiary of the PNC Financial Services Group.