International Paper Co., Memphis, Tenn., announced in a news release it plans to make a $1.25 billion voluntary contribution to its U.S. defined benefit plan by Sept. 15.
The company said the contribution is being partially funded by a new $1 billion debt offering. In a webcast on Monday afternoon, Glenn R. Landau, senior vice president and chief financial officer, said the company will also increase the fixed-income allocation and lengthen the duration of fixed-income assets in the plan. He did not provide specifics.
The moves, he said, will help the funding of the plan, and also mean the company will not have any required contributions "for the next five years." He said no further voluntary contributions are planned.
The company contributed $771 million to the plan in 2016 ans also made a lump-sum offer to about 47,000 former employees who were vested participants of the Retirement Plan of International Paper Co. but had yet to retire. The former employees represented about $3 billion in pension liabilities. Of that total, about $1.2 billion was paid out to about 25,000 retirees who took the offer.
The company had also announced in 2014 plans to freeze the U.S. defined benefit plan to future benefit accruals as of Dec. 31, 2018.
As of Dec. 31, U.S. defined benefit plan assets totaled $10.31 billion, with projected benefit obligations totaling $13.68 billion, for a funding ratio of 75.4%, according to the company's most recent 10-K filing. Also as of that date, the actual allocation was: 51% equities, 27% fixed income, 12% other and 10% real estate.
Thomas J. Ryan, company spokesman, declined further comment.
