General Motors Co., Detroit, will contribute at least $4 billion in cash and $2 billion in GM common stock to the company's $85.9 billion U.S. hourly and salaried pension plans, the company announced Oct. 28.
The company also repaid $2.8 billion to the $44.4 billion UAW Retiree Medical Benefits Trust, Ann Arbor, Mich., according to a news release from the automaker. The UAW fund is a voluntary employee beneficiary association for members of the United Auto Workers.
Eric Henry, chief investment officer of the UAW plan, could not be reached for comment.
GM also announced that it will repurchase $2.1 billion in Series A stock issued under the Troubled Asset Relief Program if the company succeeds in the closing of its IPO of GM common stock. The repayment puts the total that taxpayers will have received at $9.5 billion from GM through repayments, interest and dividends since GM emerged from Chapter 11 bankruptcy protection in July 2009.
The contributions are part of a larger plan by GM to reduce its overall leverage by $11 billion, according to the news release.
It will reduce the company's net interest cost and preferred dividends by $500 million per year, Daniel Ammann, GM vice president of finance and treasurer, said in the news release.
Neither GM spokeswomen Noreen Pratscher nor Julie Gibson could be reached for comment.
GM was one of four corporations to reveal in their third-quarter earnings reports that they planned to make, or had made, large contributions to their defined benefit plans.
Lockheed Martin Corp., Bethesda, Md., plans to make $800 million in pension contributions by the end of the year, bringing its total discretionary 2010 contribution to $2.2 billion, the company said Oct. 19 in a news release.
The company had made discretionary contributions of $1.4 billion to its $22.2 billion worldwide pension plan through Sept. 30, the news release said.
In a conference call Oct. 19 on the company's third-quarter earnings, Bruce L. Tanner, executive vice president and CFO, said the contributions would ensure that the plan is 80% funded, according to a Bloomberg transcript.
E.I. du Pont de Nemours & Co., Wilmington, Del., made a voluntary contribution of $500 million to its principal U.S. pension plan in September, according to a company news release Oct. 26 announcing third-quarter earnings.
Total assets in all DuPont defined benefit plans as of Dec. 31 were $17.14 billion, said Michael Hanretta, a DuPont spokesman, in a phone interview.
“Although no contributions to the plan are currently required by U.S. pension funding rules, given the low interest rate environment in the financial markets, we decided it was prudent to make a voluntary contribution at this time,“ Mr. Hanretta said in a follow-up e-mail.
Ford Motor Co., Dearborn, Mich., contributed $100 million to its worldwide defined benefit plans in the third quarter, according to its earnings report released Oct. 26.
The company's total contribution to its defined benefit plans year-to-date as of Sept. 30 was $800 million, confirmed John Stoll, a Ford spokesman. Mr. Stoll said Ford will provide a geographic breakdown of its pension contributions at the end of the fiscal year.
Ford had $38.6 billion in U.S. defined benefit plan assets as of Sept. 30; the global total could not be learned by press time.
Separately, Ford was expected on Oct. 29 to use cash to pay off the remaining $3.6 billion of debt it owed to the $45 billion UAW Retiree Medical Benefit Trust, Ann Arbor, Mich., said Robert L. Shanks, vice president and controller, on Ford's analyst call Oct. 26.
Mr. Shanks said the move to pay off Ford's debt to the VEBA retiree health-care trust “will lower (Ford's) ongoing annual interest expense by about $330 million.”
Eric Henry, chief investment officer of the UAW VEBA, did not return a call seeking information about how the cash infusion, which the trust will receive on Oct. 29, will be invested.