Commodities

GE to freeze pension plans for about 20,000 US employees in a bid to cut debt


Employees use hand tools to assemble components of a LEAP jet engine at the General Electric Aviation plant in Lafayette, Indiana, July 19, 2019.Luke Sharrett | Bloomberg | Getty ImagesGeneral Electric said on Monday it was freezing the pension plan for about 20,000 U.S. employees with salaried benefits, as the industrial conglomerate looks to cut its huge debt pile.The company will also freeze supplementary pension benefits for about 700 U.S. employees, and these actions are expected to reduce net debt between $4 billion and $6 billion, GE said.The move will also help reduce the company’s pension deficit by about $5 billion to $8 billion.GE and its finance arm had total borrowings of about $105.8 billion as of June 30, with industrial net debt at $54.4 billion.The company has announced net debt reduction actions of between $9 billion and $11 billion, including tender offers to purchase up to $5 billion of its existing debt, in the past one month.GE said it was on track to achieve its leverage goal of less than 2.5 times net debt to EBITDA (earnings before interest, tax, depreciation and amortization) by the end of 2020.The company’s shares rose 2.6% to $8.79 in the premarket.

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