Kroger to make $1B pension contribution

Kroger Co. is looking to raise up to $1 billion to shore up underfunded pension plans, it said in a regulatory filing Monday.

Kroger said it would raise debt to pay for the contribution, which followed a review of the structure and benefits of its sponsored defined benefit plans.

The contribution would “significantly address the underfunded position of the plan,” the Cincinnati-based retailer said.

Kroger has made periodic investments to address fund liabilities for the past several years. In 2012, it combined and took over management of five multiemployer plans in which in participated.

In addition, Kroger said it anticipated distributing certain participants’ benefit balances out of the plan via a transfer to other retirement plan options or a lump sum payout, depending on elections of the plan participants.

“We believe a contribution to the plan and payout to participants at this time are strategic opportunities based on the current interest rate environment, the potential future changes to the U.S. tax code, and scheduled Pension Benefit Guaranty Corporation fee increases,” Kroger said.

There will be a one-time expense in associated with the settlement of these obligations that is not contemplated in Kroger’s earnings guidance for the year.