Ashland to boost pension plan with stock contribution

01 October 2009 17:16  [Source: ICIS news]

TORONTO (ICIS news)--Ashland intends to contribute up to $100m (€68m) of newly issued common stock to its Ashland Hercules Pension plan, the US specialty chemicals producer and distributor said on Thursday.

Ashland's shares were down 5.4% to $40.88 in Thursday morning trading in New York.

The voluntary contribution represented less than 5% of the plan’s assets and less than 4% of total Ashland shares outstanding, the company said.

Ashland CEO James O'Brien said the move would strengthen the pension plan and reduce pension expenses, while conserving cash.

Ashland described its plan as a "qualified defined benefit pension plan."

Under defined benefit plans, employers promise employees a certain monthy benefit upon retirement, and the liability for the pension is with the employer.

The plans are widespread in the public sector whereas in the private sector employers tend to prefer defined contribution plans, under which they contribute to the plan but do not promise a specific benefit. 

Ashland expected to make the stock contribution, which would be fully tax-deductible, in early November, it said.

($1 = €0.68)

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By: Stefan Baumgarten
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