BAE Systems, London, will use the proceeds of a 10-year bond to make a one-off £1 billion ($1.2 billion) contribution to its £13 billion BAE Systems U.K. Pension Scheme.
A regulatory filing Wednesday said the $1.3 billion bond issue — which is aimed at institutional investors in a private placement — will pay 3.4% interest per year and mature on April 15, 2030.
The move follows a decision by the the global defense, aerospace and security company to accelerate its pension fund deficit recovery program to plug a £1.9 billion deficit. BAE's four U.K. pension funds have a combined £27.7 billion in assets.
Under the new deficit recovery plan, announced in February, the company committed to a one-off payment of £1 billion this year, a spokeswoman said.
Following a consultation with the U.K. Pensions Regulator, BAE agreed in February to spend an additional £240 million in 2020. About £250 million will be paid by March 31, 2021, as part of the new recovery program.
The previous recovery program, tackling what was a £2.1 billion deficit, was set to run until 2026.
