Special_Situations_-Request_for_Information.docx

SPECIAL SITUATIONS INVESTMENT MANAGEMENT SERVICES

REQUEST FOR INFORMATION

INTRODUCTION

The Pension Benefit Guaranty Corporation (PBGC) is issuing this Request for Information (RFI) regarding Special Situations Investment Management Services. PBGC will use the information gathered in order to assist the Government in determining the appropriate acquisition strategy. The Corporate Investments Department (CID) is considering a procurement for a special situations investment manager in Fiscal Year 2015. (See Appendix A for the Draft Statement of Objectives) The purpose of this announcement is to: (1) collect information about the market for special situations investment managers; (2) identify potential service solutions that could meet PBGC’s needs; and (3) obtain industry insight regarding PBGC’s requirements. The Corporate Investments Department (CID) is the organization within PBGC that is responsible for providing investment management services for plans trusteed by the PBGC and for assets managed by the Corporation.

THIS IS AN RFI ONLY. This RFI is issued solely for information and planning purposes—it does not constitute a Request for Proposal (RFP) or a promise to issue a RFP in the future. This RFI does not commit the Government to contract for any supply or service whatsoever. PBGC is not currently seeking proposals and will not accept unsolicited proposals. Respondents are advised that the Government will not pay for any information or administrative costs incurred in response to this RFI; all costs associated with responding to this RFI will be solely at the respondent’s expense. All submissions, detailed below, become Government Property and will not be returned. Small Businesses possessing the capabilities to perform the tasks below are encouraged to reply to this RFI. Failure to respond to this RFI does not preclude participation in any future RFP, if any such request is issued.

BACKGROUND

The Pension Benefit Guaranty Corporation (PBGC or the Corporation) is a federal corporation created by Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) that maintains investment funds. PBGC maintains two separate investment funds (Revolving and Trust). The Revolving Fund receives all premium payments and is invested solely in "book-entry" U.S. Government securities held at the U.S. Treasury. The Trust Fund receives assets from terminated plans. Trust Fund assets can be more flexibly invested than Revolving Fund assets, such that possible asset classes include equities, debt obligations and real estate. In addition, the Trust Fund holds any type of assets received from terminated pension plans.

The Special Situations Investment Manager (SSIM) has the responsibility for accepting certain assets for the Trust Fund as assigned by the PBGC, pursuant to the authority of the ERISA. These assets, by their nature or because of regulatory constraints, are typically unusual, illiquid or difficult to market. Examples of these positions are securities of private or closely held companies; equity positions with little or no trading activity, equity positions with trading restrictions and/or limitations, equity positions that represent a large percentage ownership of a company, real estate, promissory notes, bonds, profit sharing interests, warrants, options, commodities, and bankruptcy claims. (See Appendix C for sample holdings) Both the total net worth of these assets and the values of the individual assets can vary greatly over time as it is primarily dependent on both the nature of assets received from terminated and trusteed pension plans as well as the assets received in settlement agreements with former plan sponsors or through the bankruptcy process. Historically, the total net worth of these assets have ranged from approximately $10 million to $1 billion. Individual assets have ranged in value from nil to the hundreds of millions. The above examples are not intended to reflect all possible assignments to the SSIM. The SSIM may be assigned any asset PBGC deems necessary and/or appropriate. The primary characteristic of these positions would be the need for development of a "work out" or liquidation strategy and the implementation of a defined liquidation format or plan.

DESCRIPTION

The SSIM is expected to use its best efforts to prudently market and liquidate the positions at fair market value. These positions are not generally intended to be held as long term positions by the PBGC. However, it is recognized that because of the illiquid nature of these holdings, they may remain in the portfolio for extended periods of time (or to maturity) if efforts to liquidate the positions are not successful. In addition, the liquidation proceeds generated from the successful sale of these positions shall not remain with the SSIM, but shall be transferred from the SSIM’s account to a holding account at PBGC’s Custodian Bank immediately upon settlement. It is not intended that any liquidation proceeds shall be retained for the acquisition of new positions selected by the SSIM.

The SSIM shall be in a fiduciary relationship with respect to the assets assigned to it, and to PBGC; and in general, shall have full and complete discretion with regard to the positions assigned as well as independent voting authority for those positions for which proxy voting is required. In addition to proxy voting, the SSIM will be responsible for handling corporate actions for portfolios of publicly traded securities that are in transition. This primarily includes the in-kind assets that are commingled from terminated and trusteed pension plans prior to liquidation or transition to other PBGC investment managers.

From time to time PBGC receives requests to restructure/re-negotiate assets and/or settlement agreements received in payment of amounts due as a result of the termination and trusteeship of underfunded pension plans.

It is important to note that PBGC funds are available, if necessary, to meet capital calls, fund improvements and/or to assist in increasing the value of an asset in order to maximize marketability and value.

The SSIM contractor will be tasked with the responsibility for providing SSIM Services by undertaking the management and liquidation of certain assets for the Trust Fund as assigned by the PBGC, pursuant to the authority of the ERISA. The SSIM shall be in a fiduciary relationship with respect to the assets assigned to it, and to PBGC; and in general, shall have full and complete discretion with regard to the positions assigned as well as independent voting authority for those positions for which proxy voting is required.

CAPABILITY STATEMENT

PBGC requests that interested vendors express their interest in this proposed procurement by submitting statements describing their capabilities to meet the needs described above. All responses must include the following information:

Type of services provided by your firm (including teammates and subcontractors) that demonstrate the capability to perform the services described above; and A description of services provided under other contracts that are similar in size, scope, and complexity to the services described above.

APPROACH

PBGC requests that vendors provide high-level descriptions of their approaches to meeting PBGC’s anticipated requirements for the SSIM procurement. PBGC encourages vendors to offer creative approaches. In particular, vendors should explain in detail how they would address the following areas:

Project Team Staffing categories;

Marketing illiquid assets;

Asset Valuation;

Fee structure (including any disposition fees);

Consultation on Renegotiation;

Reporting Procedures; and Establishing Performance Metrics

QUESTIONS

PBGC requests that vendors provide answers to the following questions to assist PBGC in developing the requirements for the SSIM procurement. Vendors are free to respond to all, some, or none of the questions.

Workload and Capabilities:

1. What is the volume of your firm’s work in managing and disposing of illiquid assets? What is the approximate value of the illiquid assets you have under management? What are the assets types/classes?

1. Please provide a description of your illiquid asset management service capabilities, particularly with marketing and disposing of assets.

1. What are the industry practices to attracting and maintaining qualified employees and key personnel?

1. Please describe your firm’s experience in maintaining continuity of operations to federal government standards.

1. What kind of ongoing training would be required to become familiar with PBGC policies and procedures? How do you propose such training be implemented?

1. What labor categories would be needed to perform the described services? How would a team performing these services be structured?

Sample Task Order:

A Sample Task Order has been provided as Appendix B. The purpose of this Sample Task Order is to assist PBGC in the preparing the pricing formula/section of the RFP. It also provides potential proposers with a sample work assignment which may be issued under the contract. Please review and provide answers to the questions proposed at the end of the Sample.

REQUEST FOR INFORMATION

Interested parties from industry shall submit white papers that clearly demonstrate their approach as requested in this document. These documents are to be submitted solely for information and planning purposes. To include in your response any additional information not included in the RFI that PBGC should consider in drafting its requirements.

Please provide submissions by December 5, 2014. Please submit responses in writing via e-mail only to cofer.norman@pbcg.gov. Proprietary information, if any, must be minimized and must be clearly marked. To aid the Government in its review, please segregate and clearly identify any proprietary information included in the submission.

PBGC requests that interested vendors submit white papers that address each of the sections below. Respondents are requested to submit nonproprietary information to the greatest extent possible. Respondents must mark all proprietary information included in their responses as such.

Section

Capability Statement

Approach

Responses to Questions

Response to Sample Task Order (Appendix B)

Additional Information, if any

7.0 General / Administrative Questions

Please provide the following information (1 page maximum):

1. Name, mailing address, phone number, fax number, and e-mail address of the designated point of contact for your response.

2. The business type of your firm (large business, small business, small disadvantaged business, 8(a)-certified small disadvantaged business, HUBZone small business, woman-owned small business, veteran-owned small business, service-disabled veteran-owned small business, etc.) and authorized North American Industry Classification System codes.

Feedback and comments will not be provided to any firm regarding their individual white papers in response to the RFI.

Whitepapers submitted in response to the RFI must contain comments or suggestions that address the Government's requirements, assumptions, conditions, or contemplated approaches to this future acquisition. Please submit information or suggestions that may encourage new, different, or innovative approaches that would result in direct cost savings to the Government. Firms must not submit any of the following not related to this RFI: proposals or offers; company marketing materials; requests to be considered for award or to be notified of a future solicitation; requests to be added to a mailing or distribution list; and unrelated questions or comments.

Appendix A (Subject to Change Based on Responses) Statement of Objectives

BACKGROUND

The Pension Benefit Guaranty Corporation (PBGC or the Corporation) is a federal corporation created by Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) that maintains investment funds. PBGC maintains two separate investment funds (Revolving and Trust). The Revolving Fund receives all premium payments and is invested solely in "book-entry" U.S. Government securities held at the U.S. Treasury. The Trust Fund receives assets from terminated plans. Trust Fund assets can be more flexibly invested than Revolving Fund assets, such that possible asset classes include equities, debt obligations and real estate. In addition, the Trust Fund holds any type of assets received from terminated pension plans.

The Special Situations Investment Manager (SSIM) has the responsibility for accepting certain assets for the Trust Fund as assigned by the PBGC, pursuant to the authority of the ERISA. These assets, by their nature or because of regulatory constraints, are typically unusual, illiquid or difficult to market. Examples of these positions are securities of private or closely held companies; equity positions with little or no trading activity, equity positions with trading restrictions and/or limitations, equity positions that represent a large percentage ownership of a company, real estate, promissory notes, bonds, profit sharing interests, warrants, options, commodities, and bankruptcy claims. Both the total net worth of these assets and the values of the individual assets can vary greatly over time as it is primarily dependent on both the nature of assets received from terminated and trusteed pension plans as well as the assets received in settlement agreements with former plan sponsors or through the bankruptcy process. Historically, the total net worth of these assets have ranged from approximately $10 million to $1 billion. Individual assets have ranged in value from nil to the hundreds of millions. The above examples are not intended to reflect all possible assignments to the SSIM. The SSIM may be assigned any asset PBGC deems necessary and/or appropriate. The primary characteristic of these positions would be the need for development of a "work out" or liquidation strategy and the implementation of a defined liquidation format or plan.

The SSIM is expected to use its best efforts to prudently market and liquidate the positions at fair market value. These positions are not generally intended to be held as long term positions by the PBGC. However, it is recognized that because of the illiquid nature of these holdings, they may remain in the portfolio for extended periods of time (or to maturity) if efforts to liquidate the positions are not successful. In addition, the liquidation proceeds generated from the successful sale of these positions shall not remain with the SSIM, but shall be transferred from the SSIM’s account to a holding account at PBGC’s Custodian Bank immediately upon settlement. It is not intended that any liquidation proceeds shall be retained for the acquisition of new positions selected by the SSIM.

The SSIM shall be in a fiduciary relationship with respect to the assets assigned to it, and to PBGC; and in general, shall have full and complete discretion with regard to the positions assigned as well as independent voting authority for those positions for which proxy voting is required. In addition to proxy voting, the SSIM will be responsible for handling corporate actions for portfolios of publicly traded securities that are in transition. This primarily includes the in-kind assets that are commingled from terminated and trusteed pension plans prior to liquidation or transition to other PBGC investment managers.

From time to time PBGC receives requests to restructure/re-negotiate assets and/or settlement agreements received in payment of amounts due as a result of the termination and trusteeship of underfunded pension plans.

It is important to note that PBGC funds are available, if necessary, to meet capital calls, fund improvements and/or to assist in increasing the value of an asset in order to maximize marketability and value.

SCOPE

The SSIM will be tasked to undertake certain assets as assigned by the PBGC and then manage and liquidate that portfolio of illiquid assets. In addition to developing innovative liquidation and marketing strategies for the assigned illiquid assets, assist in the evaluation of any proposed restructuring plans of illiquid assets or settlements assigned. The SSIM will be delegated full proxy voting discretion for the assets assigned, develop and/or maintain a disaster recovery plan, and provide comprehensive reporting on the assets and issues assigned.

MANDATORY

Provide, as tasked, investment management, liquidation and advisory Special Situation Investment Manager services (“SSIM Services”) with oversight of PBGC’s portfolio of illiquid assets.

Performance Objectives The overall objective of the SSIM is to assess the value of PBGC’s illiquid assets, select the best sales method, create a marketing plan for liquidating the assets, structure and negotiate every deal in order to obtain the highest recovery for the assets. The SSIM is expected to develop a "work out" or liquidation strategy and prepare a defined liquidation format or plan. The SSIM is expected to use its best efforts to prudently market and liquidate the positions at fair value.

Requirements-SSIM (Contractor) tasking’s shall:

The SSIM will be tasked with the responsibility for providing SSIM Services by undertaking the management and liquidation of certain assets for the Trust Fund as assigned by the PBGC, pursuant to the authority of the ERISA. The SSIM shall be in a fiduciary relationship with respect to the assets assigned to it, and to PBGC; and in general, shall have full and complete discretion with regard to the positions assigned as well as independent voting authority for those positions for which proxy voting is required.

LIQUIDATION STRATEGY

Independently develop innovative liquidation and marketing plans/strategies for all assigned assets which reflect an extensive knowledge and understanding of financial and securities analysis; securities laws and regulations; securities marketing techniques; and, experience with institutional investment companies, pension plans, and secondary markets.

These liquidation plans may include for example, valuation of the asset based on past, present and projected company and industry specific information, alternative marketing/liquidation strategies, the liquidation time frame, and any obstacles and/or risks associated with the plan implementation.

Development and/or implementation of the plan may require tasks for:

a) Identification of, and negotiation with, management of issuing companies or institutional investors for the purpose of liquidating securities and coordination directly with legal counsel; transfer agents; brokers, purchasers and banks to assure the timely settlement of trades, without the need for extensions or "buy ins” by PBGC

b) Assist, when required, PBGC staff in negotiations or to act as an expert on securities valuation matters; and to coordinate administrative, accounting and securities settlement and delivery matters with PBGC’s Custodian Bank.

Value assets, when required, for PBGC that it doesn’t specifically manage.

PBGC may task, under this contract, as a result of receiving the SSIM’s internal or external investment, market and economic research training materials and support capabilities and services in the performance of PBGC’s investment responsibilities. This does not include proprietary models or information unique to the SSIM’s investment process.

Require to perform all other related services in connection with the liquidation and/or management of any assets that are or may become assigned to the SSIM by PBGC so as to protect all rights and interests of PBGC and or plan participants.

Require to maintain communications with the Corporate Investments Department (CID) staff, and primarily, the Contracting Officer's Representative (COR) who shall be identified in the contract’s Special Provisions.

To be responsible for timely notification to PBGC of significant changes in personnel, ownership, resources, or firm direction.

ILLIQUID ASSET/AGREEMENT CONSULTING

Contractor shall be tasked:

To assist in the evaluation of any assigned proposed restructuring/renegotiation, providing advice, guidance and consulting services through all phases of the process so as to protect all rights and interests of PBGC and/or plan participants.

SSIM AGENCY AND PROXY VOTING AUTHORITY

Contractor shall be tasked:

To act as PBGC’s agent in connection with the assets assigned and shall have full proxy voting discretion, where appropriate, with respect to all assets for which PBGC has responsibility and has not been assigned to any other party.

Pursuant to this proxy voting discretion, develop and implement proxy policies and procedures which shall be used during the performance of the contract; and, develop a report format that shall be used to report to PBGC on a quarterly basis.

To discuss with PBGC all specific company positions regarding its proxy voting policies, such as social, environmental, or political matters, which could affect their voting positions on proxy proposals.

Explain votes, votes that are inconsistent with the SSIM’s general proxy voting policy.

Prepare a quarterly proxy voting report. This report is separate and distinct from the SSIM’s quarterly activity report on the specific positions held by the SSIM.

Explain the basis for a particular vote.

EDUCATIONAL CONFERENCES

Contractor shall be tasked to provide up to six (6) slots in any educational conferences it may offer to clients as part of the normal contract cost.

This would include the cost of related meals offered as part of the formal conference program. Non-training or non-educational activities offered at the conference including, but not limited to, golf, fishing, tours, entertainment, etc., would not be included, as PBGC can neither pay for nor may individual employees accept these items.

PBGC shall pay its own travel, lodging, per diem, and other subsistence expenses (e.g., if meals are not offered to all attendees as part of the conference) for attendees at such conferences.

DISASTER RECOVERY

Contractor shall be tasked to:

Develop and or maintain a disaster recovery plan which includes critical business operations, computer systems and telecommunications.

Test plan and/or update annually.

Provide a copy of the annual test to PBGC within 30 calendar days of the completion of the test.

The disaster recovery plan should include, but not be limited to, the following:

Emergency response procedures, including:

1. Step-by step instructions identifying explicit techniques to be used for responding to various emergency situations;

2. Identification of disaster recovery teams; and

3. An organizational chart and list of key personnel responsible for performing the disaster recovery actions as well as the priority of duties and lines of authority.

Backup site activation procedures which identify:

1. Backup site location; and

2. Backup site activation processes.

(If the backup site is operated by an organization other than the offeror, a copy of the Alternative Site Processing Agreement shall be provided to PBGC within 30 days after being added to the plan or at the same time as the current and/or revised plan whichever is earlier. Backup site activation procedures shall contain a list of key personnel and the recovery team(s) they support.)

Primary site recovery procedures, including:

1. Instructions for accomplishing salvage operations;

2. A replacement acquisition strategy for hardware, software, telecommunications, etc.;

3. Facility reconstruction plans; and

4. Identification of personnel supporting the primary site recovery and the team(s) they support.

Primary site reactivation/normalization, including:

1. Procedures to ensure a smooth transition from the alternative processing site to the primary site; and

2. A list of teams performing the various functions and the personnel assigned to those teams.

Please note that from time to time, situations may arise whereby the nature of the work assigned under this contract will warrant a lower fee than currently structured in the contract fee schedule. When this situation arises, an appropriate fee will be negotiated

DELIVERABLES/REPORTS

The SSIM shall provide statements and reports that detail the following information. Unless otherwise stated, the unidentified specific due dates will be encompassed within the SSIM contract.

1. Inventory of Securities -- Listing of all holdings, stated at both cost and market or estimated value using appropriate accounting standards, and which includes identifier (CUSIP), account number, type of asset, task number, security name, par value, cost, price (per share), and market value. (Monthly)

2. Account Activity -- All account activity for the period, including purchases, sales, income received, accruals and issue maturities. (Monthly)

3. Narrative Report –Narrative on each position within the inventory, which provides approximate market value, the valuation source, the type of assignment (i.e. valuation/liquidation; advisory), and total inception to date costs charged to the PBGC by the SSIM. Additionally, the narrative will provide a description of the asset held, the assignment date, a synopsis of work completed since inception of the task, the prior month’s activity performed by the SSIM, and the current thesis with respect to the asset. The SSIM will provide that report in advance of a monthly conference call with CID staff. (Monthly)

4. Reconciliation Reports -- The SSIM shall prepare a report in which holdings are reconciled at market value with PBGC’s Custodian Bank. (Monthly)

5. Proxy Voting Report -- At a minimum, the quarterly proxy voting report shall include:

6. Report on the Status of Significant Positions Received in Settlement Agreements which is a list of equity positions at or exceeding 5% of total shares outstanding. (Quarterly)

7. The SSIM will participate in at least one on-site meeting per year at PBGC’s offices and will host CID staff in a least one on-site meeting per year at the SSIM’s office.

8. Upon being assigned an asset, PBGC requires a written evaluation of each asset, complete with an accompanying liquidation strategy and proposed timeline for liquidating the asset. The due date of this deliverable depends on the particular facts and circumstances of each asset assigned to the SSIM, but receipt by PBGC from the SSIM will generally be required within 30 days of assignment.

The SSIM shall provide annual statements and reports that detail the following information:

1. Evidence of fidelity bond and errors and omissions professional liability coverage.

2. Revised Form ADV Parts I and II.

3. SSAE 16, if available.

The SSIM shall provide other reports, research and publications as may be required by PBGC from time to time.

WORK ASSIGNMENTS

When services are required under this contract, the COR shall task the SSIM (contractor). As provided elsewhere, these assignments may be issued orally or in writing. Assignments issued orally shall be confirmed in writing. The SSIM (contractor) shall maintain records that clearly distinguish the various tasks assigned.

ASSIGNMENT PROCEDURES

Performance under this contract is subject to the following procedures:

(a) The COR will issue tasks in written form to the SSIM, providing specific information on work to be performed within the scope of the contract. Each assignment will indicate the objectives or results desired.

(b) Assignments will contain, as a minimum, the following information:

(l) Name and signature of the COR (signature not required if sent electronically)

(2) Contract number, order number, and date

(3) Description of work

(4) Documentation requirements

(5) Any other necessary information

(6) Date of Order

(c) The COR may modify assignments at his/her discretion, in writing.

(d) After award, the COR may task the SSIM in writing or through electronic communication, to commence performance of the task. Otherwise, the SSIM is not authorized to commence task performance prior to the issuance of the task or other written notice provided by the COR. In no case shall the SSIM commence work without prior written approval from the COR.

GENERAL TERMS

(a) Assignments issued under this contract will specify work to be accomplished to satisfy a PBGC requirement, and will incorporate the terms and conditions of this contract.

(b) The SSIM may, with the approval of the COR, include in the project-definition phase of the work plan, at no cost to the PBGC, a sub-task identified as “Project Team Staffing”, and by mutual agreement with the COR establish a scheduled date for completion. Otherwise, the SSIM shall ensure that a task will be 100% staffed and the project personnel on-site, ready to begin work, within ten (10) business days of approval of the task unless waived by the COR.

(c) All personnel proposed by the SSIM for an assignment shall have specific experience relating to the type of service required in the task for which the person was proposed. The personnel proposed by the SSIM for an assignment shall in the aggregate possess experience in each of the technical support services required to perform the work. PBGC reserves the right to assess the personal qualifications of, and to approve or disapprove, SSIM staff proposed for a task.

(d) The SSIM may not reassign or replace personnel assigned to a particular project without prior written authorization from the COR. Approval shall not be withheld so long as the following criteria are met:

(1) The overall delivery schedule is not affected;

(2) The proposed personnel possess or will develop a working knowledge of the services required under the modified task prior to providing the service; and

(3) The time required to develop this working knowledge will not be billable to PBGC.

(e) The PBGC reserves the right to terminate a task at any time, for any reason.

(f) No work is to begin on any task until PBGC has reviewed and given written approval to the detailed project/work plan submitted by the SSIM. The task and task proposal must be signed (if electronic, no signature is necessary) by the COR and, when applicable, co-signed by the Deputy Chief Investment Officer or Chief Investment Officer.

(g) Any subsequent changes to the project/work plan must be approved by the COR. In addition, any changes in aggregate contract costs must be approved by the Contracting Officer. The SSIM shall notify the COR immediately upon becoming aware of any issue, (e.g., personnel, cost or schedule change), that may cause a delay in completing the task on schedule or exceed the cost of the approved task. In all cases the SSIM must revise, in advance, all associated plans and schedules and obtain the approval of the COR to modify the task before incurring any additional cost.

(h) The SSIM shall appoint for each task a lead person who meets the qualifications outlined in the Key Personnel Clause of this requirement. Each task will be under the technical direction of the COR from whom the SSIM's lead person will take technical direction.

(i) The work assignments provided under this contract by PBGC will contain a section specifying delivery and/ or performance requirements.

(j) All reports and documents shall be required in draft and/or final form depending on the nature of the report.

(k) The number of copies, media (hard-copy and/ or electronic), format and hardware/ software compatibility requirements for the deliverables may be specified in the individual task.

(l) The COR or designated representative will provide technical oversight and guidance in the completion of individual assignments. In addition, some assignments may require considerable interaction with PBGC personnel to accomplish the specified work.

(m) The COR will be responsible for liaison with agency users. All user contact by SSIM personnel shall be for the purpose and within the scope specifically defined by the COR or designated representative of the COR.

Appendix B Sample Task Order

Steelers Inc.

Steelers Inc. is a metals processor headquartered in Ventura, California. On January 15, 2002, Steelers and eight of its subsidiaries filed for protection under Chapter 11. Steelers’ entered into bankruptcy not only as a result of poor financial performance but also from the cash flow requirements needed to address its substantial environmental cleanup liabilities.

On September 18, 2003, the Debtors filed their amended Joint POR, which provided for both a distress termination of the Steelers Consolidated Employees’ Pension Plan (“Plan”), continuation of two smaller defined benefit plans, and settlement of PBGC’s claims. PBGC estimated the Plan had UBL’s of approximately $20.9 million. The POR was the result of more than a year of negotiations among numerous parties, including the Nuclear Regulatory Commission, the EPA, the Creditors Committee and PBGC.

The POR provided for (a) the pre-confirmation sale of various non-core business assets with the proceeds reserved for distribution to unsecured creditors, (b) the consolidation of subsidiaries into Reorganized Steelers (“RS”), (c) the continuation of one subsidiary as a wholly-owned subsidiary of RS, and (d) the creation of four new wholly-owned subsidiaries of RS to own and remediate Steelers’ property in Muskogee, OK as well as three additional Steelers facilities requiring remediation as a result of environmental contamination. The four new subsidiaries will be funded by a series of unsecured non-interest bearing notes issued by Steelers with a face amount exceeding $40 million. Note payments will be used by the new subsidiaries to fund their remediation costs.

Steelers confirmed its POR on December 23, 2003. The effective date of the POR was January 23, 2004. In accordance with the POR, Steelers terminated the Plan as of December 15, 2003. PBGC became trustee of the Plan on February 5, 2004. Steelers and the PBGC entered into a settlement agreement, signed on December 19, 2003, under which the PBGC would receive on the effective date of the POR, in full satisfaction of the claims resulting from the Pension Plan's termination: (I) $9.5 million, non-interest bearing, ten-year, note from Steelers Inc., secured by land, buildings, and equipment owned by or used in connection with operations of Steelers de Mexico, together with (ii) distributions of cash and/or stock on account of a $1.5 million allowed general unsecured claim and additionally, (iii) 20% of the New Steelers Common Stock (subject to dilution for issuances pursuant to an employee stock plan).

On February 23, 2004, PBGC received 757,486 shares of New Steelers Common Stock. No value was established for the stock until February 25, 2004, when it became available for trade on the over-the-counter market (symbol: STLI.PK) at a price of $3.80 per share, which valued PBGC’s stock at $2,878,446.80.

Provide a valuation of the Common Stock and the 10 year Note.

Provide a liquidation plan for both assets.

Appendix C Sample Holdings

As of 11/30/12 the portfolio consisted of the following:

· 11 Real Estate properties. 3 (1 commercial & 2 non-commercial) valued at approximately $1.4 million. 8 commercial properties in the valuation process.

· 4 Limited Partnerships. 2 Real Estate and 2 Non-real estate valued at approximately $0.175 million.

· 3 Private Equity Securities valued at approximately $9.23 million.

· 3 Public Equity Securities valued at approximately $0.200 million.

· 4 Private Fixed Income Securities valued at approximately $492.5 million.

Currently the portfolio consists of the following:

· 15 Real Estate properties. 12 commercial & 2 non-commercial valued at approximately $16.4 million.

· 2 Limited Partnerships. 1 Real Estate and 1 Non-real estate valued at approximately $0.015 million.

· 1 Private Equity Security valued at approximately $0.134 million.

· 3 Public Equity Securities valued at approximately $0.100 million.

· 1 Private Fixed Income Security with dubious value.