Tags: AT&T | Wireless | Stock | Pension

AT&T Seeks to Contribute $9.5B in Wireless Stock to Pension Fund

AT&T Inc., the largest phone company in the U.S., said on Friday that it is seeking government approval to contribute a stake in its wireless business worth $9.5 billion to the trust that pays pension benefits for its 360,000 retirees.

AT&T's pension plan was underfunded by about $10.2 billion at the end of last year. If approved by the Department of Labor, the move would extinguish most of that liability by transferring equity in the company from shareholders to the pension fund.

The shares would entitle the fund to cash dividends of about $560 million per year. AT&T promises to prioritize this payment over dividends and buy backs for common shareholders, but doesn't expect it to have to choose: the $560 million would be just 4 percent of its 2011 free cash flow, or the cash it earns from operations less capital expenditures.

The Dallas-based company also said that the move won't significantly affect its earnings.

The Communications Workers of America, the largest union that organizes AT&T workers, said it is "pleased to see that AT&T is taking steps to further strengthen its defined benefit pension fund."

"AT&T's announcement comes at a time when many companies have moved in the opposite direction, eliminating or underfunding their pension plans and putting workers' retirement security at risk," the union said.

AT&T shares fell 40 cents to $35.62 in midday trading, in line with market indexes.

© Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

1Like our page
2Share
FinanceNews
AT&T Inc., the largest phone company in the U.S., said on Friday that it is seeking government approval to contribute a stake in its wireless business worth $9.5 billion to the trust that pays pension benefits for its 360,000 retirees.
AT&T,Wireless,Stock,Pension
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
© Newsmax Media, Inc.
All Rights Reserved