Featured Company News - International Paper Transfers Massive Chunk of Pension Liabilities to Prudential Insurance

LONDON, UK / ACCESSWIRE / October 4, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for International Paper Co. (NYSE: IP), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=IP. The Company announced on October 02, 2017, that it has entered into an agreement with The Prudential Insurance Co. of America (NYSE:PRU) ("Prudential"), a leader in retirement benefits, to purchase a group annuity contract and to transfer International Paper's US qualified pension plan projected benefit obligations worth approximately $1.3 billion. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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The transaction has been primarily designed to reduce International Paper's risk related to its long-term pension obligations.

Transaction Details

• International Paper intends to fund the transaction with pension plan assets.

• Prudential will take on the responsibility for pension benefits and annuity administration for about 45,000 former employees of International Paper or their beneficiaries by the end of 2017. Under the plan, they would get less than $450 in monthly benefit payments.

• However, the transaction would not imply any major alteration in the pension benefits for any plan participants.

• In fact, the retirees and beneficiaries who are covered under the transaction would receive individualized information packages with further details and answers to frequently asked questions.

• As of now, the transaction is subject to customary closing conditions. It is expected to close on October 03, 2017.

Move Intended to Manage Future Costs

International Paper's move to transfer a part of its pension obligations to Prudential is in-line with a strong trend among US Companies that are trying to better manage their pension risks and costs. Prudential has extensive experience in the long-term management of retirement benefits. Thus, this decision would help International Paper secure the retirement benefit for all its retirees.

Glenn R. Landau, Senior Vice President and Chief Financial Officer (CFO) at International Paper, shared his views about the transaction wherein the Company has transferred its obligations and related assets to a leader in retirement benefits. He mentioned that the Company's first and foremost target is to ensure that its retirees' benefits are secure and maintained. This transaction achieves that goal, while also enabling International Paper to better manage its future costs related to the pension plan. He further stated that the Company has cautiously selected a highly rated, experienced retirement benefits provider; therefore all retirees should be positive about the transaction.

A $400 million Settlement Charge

Due to this transfer agreement, International Paper anticipates a non-cash pension settlement charge of approximately $400 million before tax ($247 million after-tax) in the fourth quarter of 2017.

Prudential, The Global Leader In Pension Risk Transfer Solutions

Peggy McDonald, Senior Vice President at Prudential, announced that Prudential is pleased that International Paper has chosen it for providing retirement security to around 45,000 of its former employees. Prudential is keen on providing them a seamless transition.

Scott Kaplan, Prudential's Head of Pension Risk Transfer, highlighted that Prudential has emerged as a unique player in the pension risk transfer market. The Company combines strong pension and actuarial expertise with investment capabilities and deep financial resources. These help its clients reduce their pension risk while allowing them to focus on their core business. Prudential is committed to keeping its promises to all retirees as well as beneficiaries. In fact, the Company makes over $10 billion in pension payments to more than 1 million retirees and their beneficiaries every year.

The agreement with International Paper follows other prominent transactions with General Motors, Verizon, Motorola, Bristol-Myers Squibb, The Hartford, Kimberly-Clark, and JCPenney.

About International Paper

International Paper is a leading global producer of renewable fiber-based packaging, pulp, and paper products. Its manufacturing facilities are located in North America, Latin America, Europe, Northern Africa, as well as Russia. The Company works to develop packaging products that protect and promote goods, and enable world-wide commerce; pulp for diapers, tissue, and other personal hygiene products that promote health and wellness; papers that facilitate education and communication; and paper bags, cups, and food containers that provide convenience and portability. International Paper, which is headquartered in Memphis, Tennessee, employs nearly 55,000 workers located in over 24 countries. The Company's net sales were $21 billion for the year 2016.

Last Close Stock Review

At the closing bell, on Tuesday, October 03, 2017, International Paper's stock rising slightly by 0.02%, ending the trading session at $57.39. A total volume of 1.38 million shares have exchanged hands. The Company's stock price surged 1.13% in the last three months, 13.20% in the past six months, and 20.06% in the previous twelve months. Moreover, the stock gained 8.16% since the start of the year. The stock is trading at a PE ratio of 29.13 and has a dividend yield of 3.22%. The stock currently has a market cap of $23.72 billion.

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