Safeway Inc., the California-based grocery chain, will pump anadditional $212 million into the company’s largest defined benefitplan, which covers 54,000 participants, as part of a settlementwith the Pension Benefit Guaranty Corp.

The deal resulted after Safeway was acquired by Cerberus CapitalManagement, a private equity firm that also owns a stake inAlbertsons, another supermarket chain, headquartered in Boise,Idaho.

The acquisition, along with the intent to merge the two chains,was announced last March and finalized Jan. 30 for $8 billion. Thecombined brands now boast 2,400 stores nationwide, and employroughly 250,000 people.

The acquisition placed Safeway’s pension plan in line behind $11 billion in secureddebt, according to the PBGC.

“From the beginning we knew this sale would put the retirementbenefits of nearly 54,000 people at risk, so we moved quickly toengage with Cerberus and Albertsons to get better funding for theplan,” said Sanford Rich, PBGC's chief of negotiations andrestructuring.

The agreement was a product of PBGC’s Early Warning Program,which monitors companies with underfunded plans that are boughtout, potentially further jeopardizing obligations to participantsin the acquired plan.

“This program allows PBGC to prevent losses before they occur,rather than waiting to pick up the pieces when a company goesbankrupt and its resources are limited,” according to a PBGC factsheet.

Under guidance issued in 2000, the PBGC may seek pensionprotections under the Early Warning Program in limitedcircumstances.

The agency is allowed to inquire into the terms of a prospectivetransaction if the company being bought has a belowinvestment-grade bond rating and pension liabilities in excess of$25 million, or the company has an unfunded liability in excess of$5 million, no matter its bond rating.

Following the announcement of the acquisition last March, FitchRatings downgraded Safeway to a BBB- rating, the lowest of itsinvestment grade ratings. Moody’s had downgraded Safeway’s bondrating to just above “junk” status early in 2012.

In March of 2012, Safeway reported a $1.9 billion unfunded liability in its multiemployer pensionplans.