Crown Holdings, Inc. (NYSE: CCK) has announced its intention to transfer $740 million in US pension plan obligations. This move involves the purchase of a group annuity contract from Massachusetts Mutual Life Insurance Company (MassMutual) to fully guarantee benefits for nearly all retirees and deferred vested participants in its primary US defined benefit plans. The agreement covers approximately 12,000 participants.
Upon completion of the transfer, Crown will eliminate approximately $740 million in both US pension plan assets and liabilities. This transaction, when combined with previous buy-outs in Canada and the UK, will result in the annuitization of approximately $4 billion of pension liabilities since 2021.
The company expects to contribute approximately $100 million to the plan and record a one-time non-cash charge of approximately $450 million ($340 million after tax) in the third quarter of 2024 as part of the plan settlement.
The transaction is expected to further strengthen Crown's balance sheet, significantly reduce future earnings and cash flow risk, and maintain secure benefits for its pension plan participants. MassMutual will commence payments to participants starting November 1, 2024, and benefits payable to retirees and other plan participants will not be affected by the transaction.
Crown Holdings, Inc., a leading global supplier of rigid packaging products and related services, reaffirms its previously provided 2024 full-year adjusted free cash flow guidance of at least $750 million.
This move demonstrates the company's strategic efforts to manage and reduce pension obligations, ensuring the security of benefits for its retirees and participants while also enhancing its financial position. Today the company's shares have moved 0.6% to a price of $89.72. Check out the company's full 8-K submission here.
