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FirstEnergy pumps $1.25 billion into pension plan in January

FirstEnergy Corp., Akron, Ohio, disclosed in its 10-K filing on Tuesday that it contributed $1.25 billion to its qualified pension plan in January.

The contribution consisted of the $500 million in minimum required contributions for 2018, as well as an additional $750 million discretionary contribution funded by the issuance of preferred stock on Jan. 22.

The $2.5 billion equity issuance, "which included $1.62 billion in mandatorily convertible preferred equity with an initial conversion price of $27.42 per share and $850 million of common equity issued at $28.22 per share," was also used to reduce other company debt by $1.45 billion, with the remainder used for "general corporate purposes," the filing said.

The additional contribution will address funding obligations for future years, the filing said.

The company contributed $18 million to its pension plans in 2017 and $899 million in 2016.

The company also disclosed in the 10-K filing that its pension plan returned 15.1% in the year ended Dec. 31. Its annual returns for 2016 and 2015 were 8.2% and -2.7%, respectively.

As of Dec. 31, pension plan assets totaled $6.704 billion, while projected benefit obligations totaled $10.167 billion, for a funding ratio of 65.9%, the same as the previous year. The discount rate for 2017 was 3.75%, down from 4.25% the previous year.

Also as of Dec. 31, the actual asset allocation was 42% equities, 32% fixed income, 10% absolute-return strategies, 9% real estate, 6% cash and short-term securities, and 1% private equity.