Unisys Corp., Blue Bell, Pa., plans to use about half of the proceeds from the impending sale of one of its businesses to improve the funded status of its U.S. pension plans in preparation for potential pension risk transfer transactions.
The sale of its U.S. government business to Science Applications International Corp. for $1.2 billion is expected to close in the first half of 2020, and within a month of closing, the company plans to contribute about $600 million to its U.S. pension plans, said Mike Thomson, chief financial officer. The contribution will be applied to the company's minimum required contributions for 2020, 2021 and 2022.
Once the contributions are made, the company will begin to pursue transactions to transfer as much of its pension liabilities as is economically feasible through lump-sum offerings and the purchase of group annuity contract, Mr. Thomson said.
"We're going to aggressively approach that market, and our objective is to remove this liability from the balance sheet," Mr. Thomson said. "Bulk lump sums and annuities are both the tool set to do that."
The timing of those transactions has yet to be determined.
As of Dec. 31, 2018, U.S. pension plan assets totaled $3.113 billion, while projected benefit obligations totaled $4.558 billion, for a funding ratio of 68.3%, according to the company's most recent 10-K filing. Mr. Thomson said further information on the plan and its funding ratio will be available Feb. 25.