According to a filing with the US Securities and Exchange Commission, NWAC’s move satisfies pension funding requirements, Dow Jones reported. The US Department of Labor (DoL) approved the transaction in January after the cash-strapped air carrier asked to substitute Pinnacle shares for cash (See NW Airlines Seeks OK for Stock Contribution to Pensions ).
The St. Paul, Minnesota airline said its 2003 pension contributions associated with the 2003 plan year are estimated to be $468 million. As of December 31, the plans were underfunded by about $3.1 billion, according to the regulatory filing.
The DoL’s approval of the Pinnacle stock deal also carried mandates that the NWAC pension funds have the right at any time to require NWAC to repurchase the shares for cash equaling the greater of the original purchase price or what is then the market value of the shares.
Before the contribution, NWAC transferred all the outstanding stock of Pinnacle Airlines to the parent organization, Pinnacle Airlines Corp., in exchange for all of the outstanding common stock of Pinnacle Airlines Corp. and one share of Series A preferred stock of Pinnacle Airlines Corp. Pinnacle Airlines Corp. also issued a dividend to Northwest of a $200 million seven-year note from Pinnacle Airlines that bears interest at 3.4%.
Northwest has also applied to the Internal Revenue Service for the OK to reschedule some or all of its required 2003 plan year contributions. The company said it expects to receive an IRS response by next month.