“Our pension plans have an investment opportunity in the company’s stock because, in the opinion of management, the stock price is artificially depressed because of the large short interest in the stock,” the company said in a filing with the Securities and Exchange Commission, according to a Dow Jones report.
Navistar’s management believes it is prudent to preserve the company’s cash in the event another terrorist attack, a war with Iraq or other factors cause markets to deteriorate next year, the company said. In the SEC filing the firm said that contributing stock instead of cash will benefit the company by “conserving cash and increasing our equity base, replacing a portion of the equity which will be reduced as a result of the previously mentioned charge to the fourth quarter earnings.”
Navistar made the disclosure in a filing with the Securities and Exchange Commission in order to “clarify” published comments Thursday by chief financial officer and vice chairman Robert Lannert. On Thursday, Lannert said he would “expect” Navistar to use free cash flow to fund $268 million in estimated contributions for 2002 and 2003 and didn’t see the need for additional borrowing in the next three years, according to Dow Jones.
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