Two Verizon Communications Inc. retirees asked a U.S. judge to prevent the company from selling a pension plan covering them and about 41,000 others to the Prudential Insurance Co. of America for $7.5 billion.
The transaction, which would convert the plan into an annuity, will deprive the retirees of federal pension protections, the plaintiffs said yesterday in filings in federal court in Dallas. The retirees, both of whom worked for a Verizon predecessor, are seeking a temporary restraining order on behalf of themselves and their fellow management retirees.
Without an order blocking the deal, the retirees will "suffer irreparable harm," in the form of immediate loss of protections under the federal Employee Retirement Income Security Act, they said.
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Verizon, the second-largest U.S. phone company, said on Oct. 17 that it planned to sell its pension obligations to remove risk from its balance sheet.
The company today said the lawsuit is without merit.
"Verizon's actions regarding its pensions protect the interests of our retired management employees," the New York-based company said in a statement. "The monthly pension benefits of the retirees receiving an annuity from Prudential will remain unchanged."
Verizon asked the court not to grant the restraining order and said it may be harmed if the transaction doesn't close by Dec. 10.
Prudential, the second-largest U.S. life insurance company, is also named as a defendant in the suit. Dawn Kelly, a spokeswoman for Newark, New Jersey-based Prudential, declined to comment on the case.
The case is Lee v. Verizon Communications Inc., 12-cv-4834, U.S. District Court, Northern District of Texas (Dallas).
Bloomberg News
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