AK Steel Transfers Over $600 Million in Pension Obligations
November 20 2019 - 10:30AM
AK Steel (NYSE: AKS) said today that it has purchased a group
annuity contract from Massachusetts Mutual Life Insurance Company
(MassMutual) to transfer approximately $615 million of its pension
obligations.
“We are pleased to have completed another annuity
transaction, which brings the total pension obligations we have
transferred to highly-rated annuity providers to about $1.1 billion
over the past three years,” said Roger K. Newport, Chief Executive
Officer of AK Steel. “This is another important step in
de-risking our balance sheet, while continuing to demonstrate our
commitment to ensuring our retirees’ benefits are secure.”
This annuity contract permanently transfers the
responsibility to pay pension benefit obligations of about $615
million for approximately 4,250 retirees from the company’s pension
plan to MassMutual. There will be no change to the pension
benefits for any plan participant as a result of this action.
The transaction was funded entirely with pension plan
assets. As a result of this transaction, the company expects
to record a non-cash pension settlement charge of approximately $25
million in the fourth quarter of 2019.
Beginning March 1, 2020, MassMutual will begin
making benefit payments along with providing ongoing administrative
services to the specific plan participants. Retirees and
beneficiaries covered by this transaction will receive personalized
information with further details and answers to frequently asked
questions before March 1.
With this transaction, AK Steel has completed
transfers of approximately $1.1 billion in pension obligations in
aggregate, representing nearly 20,000 retirees, to highly-rated
annuity providers since 2016. Making these changes reduces
financial risks to the company and lowers administrative costs
while enabling the company to continue to meet pension commitments
to all of its retirees.
AK SteelAK Steel is a leading
producer of flat-rolled carbon, stainless and electrical steel
products, primarily for the automotive, infrastructure and
manufacturing, including electrical power, and distributors and
converters markets. Through its subsidiaries, the company
also provides customer solutions with carbon and stainless steel
tubing products, hot- and cold-stamped components, and die design
and tooling. Headquartered in West Chester, Ohio (Greater
Cincinnati), the company has approximately 9,500 employees at
manufacturing operations in the United States, Canada and Mexico,
and facilities in Western Europe. Additional information
about AK Steel is available at www.aksteel.com.
Contacts:Media – Lisa H. Jester, Corporate
Manager, Communications and Public Relations (513)
425-2510Investors – Douglas O. Mitterholzer, General Manager,
Investor Relations (513) 425-5215
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