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Valvoline gears up $400 million pension contribution

Valvoline Inc., Lexington, Ky., plans to contribute about $400 million to its U.S. qualified pension plan in the remainder of 2017, the company announced in its 10-Q filed with the U.S. Securities and Exchange Commission Tuesday.

Funding is expected to come from a $400 million senior notes offering.

"A contribution at this time is a strategic opportunity based on the current interest rate environment, scheduled Pension Benefit Guaranty Corporation premium rate increases and potential future changes to the U.S. tax code," Valvoline said in its quarterly earnings release on Aug. 1. "The cost savings related to lower PBGC premiums makes this transaction net-present value positive."

The company contributed approximately $6 million to its global pension plans in the quarter ended June 30, according to the 10-Q.

As of Sept. 30, Valvoline's global defined benefit plan assets totaled $2.31 billion and projected benefit obligations, $3.138 billion, for a funding ratio of 73.5%, according to its most recent 10-K filing. A breakout of U.S. and non-U.S. assets was not provided.

In September, the motor oil and automotive lubricants provider purchased a group annuity contract from an identified insurance company transferring about $378 million in U.S. defined benefit plan liabilities. Valvoline's pension plans were frozen Sept. 30.

A spokeswoman could not immediately be reached for additional information.