Arconic Reduces Gross Pension Obligation by $1 Billion with Purchase of Group Annuity Contract
April 29 2021 - 5:53PM
Business Wire
Arconic Corporation (NYSE: ARNC) (“Arconic” or “the Company”)
announced today it has purchased a group annuity contract from
Massachusetts Mutual Life Insurance Company (“MassMutual”) and
transferred approximately $1 billion of the Company’s U.S. pension
plan obligations and related plan assets to MassMutual.
Arconic Chief Executive Officer Tim Myers said, “We are
thoughtfully moving portions of our pension obligation to
MassMutual, a highly-rated, well-respected insurance company, to
preserve benefits to our retirees and their beneficiaries while
maintaining the funded status of the remaining plan obligations.
The transaction represents the latest step in our ongoing effort to
reduce legacy liabilities and the volatility associated with
factors beyond our control.”
The group annuity contract results in the transfer of
responsibility for remaining pension benefit payments to MassMutual
for approximately 8,400 Arconic retirees or beneficiaries.
Participants will continue to receive their benefits from the
Company’s plans through July 2021, after which MassMutual is
expected to begin making benefit payments. There will be no change
to the pension benefits for any plan participants as a result of
the transaction. Details will be provided to retired participants
and beneficiaries whose continuing payments will be fulfilled by
MassMutual.
As part of the transaction, Arconic made a $250 million
contribution to its U.S. pension plans to maintain the funding
level of the remaining plan obligations. This contribution was
funded with proceeds from the previously announced debt offering of
$300 million aggregate principal amount of the Company’s 6.125%
Senior Secured Second-Lien Notes due 2028, which closed on March 3,
2021.
As a result of the transaction, the Company expects to recognize
a non-cash pension settlement charge of approximately $575 million
($450 million after tax), subject to finalization of actuarial
assumptions and other applicable adjustments in the second quarter
of 2021.
About Arconic Corporation
Arconic Corporation (NYSE: ARNC), headquartered in Pittsburgh,
Pennsylvania, is a leading provider of aluminum sheet, plate and
extrusions, as well as innovative architectural products, that
advance the ground transportation, aerospace, building and
construction, industrial and packaging markets.
Forward-Looking Statements
Certain statements in this Current Report on Form 8-K are or may
be considered forward-looking statements, such as statements
regarding management’s views with respect to future events relating
to, and the financial impact of, the purchase of the group annuity
contract and related transactions. These statements reflect
management’s current views and are subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in these statements. These risks
and uncertainties include but are not limited to (a) the Company’s
ability to realize, within the expected timeframe, the anticipated
benefits of the transactions contemplated by the Agreement; (b) the
amount and timing of the expected settlement charge; and (c) the
other factors summarized in the Company’s Form 10-K for the year
ended December 31, 2020 and other reports filed with the U.S.
Securities and Exchange Commission. The Company disclaims any
intention or obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20210429006197/en/
Investor Contact Shane Rourke (412) 315-2984
Investor.Relations@arconic.com
Media Contact Tracie Gliozzi (412) 992-2525
Tracie.Gliozzi@arconic.com
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