US - International Paper (IP) said it was considering a voluntary cash contribution of up to $1bn into its ailing US pension plan.
John Faraci, IP chairman and chief executive said the amount would be in the range of $500m to $1bn to begin satisfying longer-term funding requirements and to lower the firm’s pension expense.
This approach to strengthening our balance sheet is consistent with our intent to maintain our investment-grade credit rating, said Faraci said
Faraci said IP planned to spend approximately $6bn to $7bn in total to strengthen the balance sheet through debt repayment and the potential contributions to its pension fund.
Reducing debt through expected improvements in cash flow from operations, combined with divestiture proceeds, will reduce our annual interest expense by about $350m and will increase our financial flexibility.
As at end Q1 of 2006, the company had approximately $11.5bn in debt.
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