Exelon Corp., Chicago, intends to use proceeds of a new $2 billion term loan to fund its pension plans and reduce the plan's combined deficit, according to a SEC filing. The utility company signed the loan with Citicorp North America on Monday. Exelon had $7.01 billion in defined benefit assets as of Dec. 31, and the plans were underfunded by $2.76 billion on that date, according to the company's annual report.
In November, Exelon officials announced a proposal to contribute the $2 billion to eliminate underfunding. It was approved by the company's board in December.
Exelon officials expect to draw about $1.2 billion Thursday and immediately contribute the money to the pension plans, according to the 8-K filing. The company will contribute the remaining $800 million "later in 2005," but the filing did not provide specifics. The company expects to repay the loan mainly from proceeds of long-term debt financing it will likely issue later this year.
Kellie Szabo, spokeswoman, said pension plan executives were not available for comment.