Tredegar Announces Initiation of Process for Pension Plan Termination and Settlement
February 10 2022 - 8:30AM
Business Wire
Tredegar Corporation (NYSE:TG, also “Tredegar” or the “Company”)
today announced that the Company’s Board of Directors has adopted a
resolution to terminate its frozen defined benefit pension plan.
The termination and settlement process, which preserves retirement
benefits due to participants but changes the ultimate payor of such
benefits, is expected to take up to 24 months to complete, subject
to receipt of customary regulatory approvals. In connection
therewith, on February 9, 2022, the Company borrowed funds under
its revolving credit agreement to contribute $50 million to the
pension plan (the “Special Contribution”) to reduce its
underfunding and as part of a program within the pension plan to
hedge or fix the expected future contributions that will be needed
by the Company through the settlement process. The Company expects
to realize income tax benefits on the Special Contribution of
approximately $11 million. Administrative costs for the pension
plan through the settlement process are estimated at $4 to $5
million.
As of December 31, 2021 (and before the Special Contribution),
the estimated, unaudited pension plan underfunding under U.S.
generally accepted accounting principles (“GAAP”) was $69 million,
comprised of investments at fair value of $245 million and a
projected benefit obligation (“PBO”) of $314 million. The ultimate
settlement benefit obligation may differ from the PBO depending on
market factors for buyers of pension obligations at time of
settlement. Pension expense is projected to be approximately $14
million under GAAP in 2022 and zero for calculating earnings before
interest, taxes, depreciation and amortization as defined in the
Company’s revolving credit agreement (“Credit EBITDA”), which is
used to compute certain borrowing ratios. The Company estimates
that, with the Special Contribution, there will be no required
minimum contributions to the pension plan until final
settlement.
The Company reported total debt and cash and cash equivalents as
of September 30, 2021, of $127 million and $30.3 million,
respectively. On December 28, 2021, the Company announced that it
had received $47.1 million from the sale of its ownership interest
in kaleo, Inc. The Company’s revolving credit agreement allows
borrowings of up to $375 million and matures in June 2024. The
Company believes that its most restrictive covenant (computed
quarterly) is the leverage ratio, which permits maximum borrowings
of up to 4x Credit EBITDA, as defined under the revolving credit
agreement for the trailing four quarters. The Company reported a
leverage ratio of 1.32x as of September 30, 2021.
The estimated, unaudited financial data as of December 31, 2021,
above remains subject to audit, review or other procedures by the
Company’s independent registered public accounting firm. As a
result, actual results may differ from the estimated, unaudited
financial results shown above and will not be publicly available
until the Company reports its fourth quarter and full year 2021
results.
Tredegar is an industrial manufacturer with three primary
businesses: custom aluminum extrusions for the North American
building & construction, automotive and specialty end-use
markets; surface protection films for high-technology applications
in the global electronics industry; and specialized polyester films
primarily for the Latin American flexible packaging market.
Tredegar had 2020 sales from continuing operations of $755 million.
With approximately 2,400 employees, the Company operates
manufacturing facilities in North America, South America, and
Asia.
FORWARD-LOOKING AND CAUTIONARY
STATEMENTS
Some of the information contained in this press release may
constitute “forward-looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. When Tredegar uses the words “believe,”
“estimate,” “anticipate,” “appear to,” “expect,” “project,” “plan,”
“likely,” “may” and similar expressions, it does so to identify
forward-looking statements. Such statements are based on Tredegar's
then current expectations and are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from those addressed in the forward-looking statements. It is
possible that Tredegar's actual results and financial condition may
differ, possibly materially, from the forward-looking statements
provided in this press release. Accordingly, you should not place
undue reliance on these forward-looking statements. Factors that
could cause actual future contributions by the Company to settle
the pension plan to differ from expectations include, without
limitation, the change in the values of pension plan assets and
liabilities up through initiating hedging activities to fix
underfunding amounts and assumptions thereafter relating to
differences between the ultimate settlement benefit obligation and
the PBO, census data, administrative costs, the effectiveness of
hedging activities and discounts required to liquidate non-public
securities held by the plan.
Tredegar does not undertake, and expressly disclaims any duty,
to update any forward-looking statement made in this press release
to reflect any change in management’s expectations or any change in
conditions, assumptions or circumstances on which such statements
are based, except as required by applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220210005229/en/
Tredegar Corporation Neill Bellamy, 804-330-1211
neill.bellamy@tredegar.com
Tredegar (NYSE:TG)
Historical Stock Chart
From May 2024 to Jun 2024
Tredegar (NYSE:TG)
Historical Stock Chart
From Jun 2023 to Jun 2024