By unloading part of their stake, UAL employee-shareholders who together own 55% of UAL, hope to diversify their holdings and help protect their nest egg, according to a Dow Jones news report.
Facing $945 million in debt repayment and other obligations before year-end, UAL, parent of the world’s second-largest carrier, has warned it may be forced to file for Chapter 11 later this year if it can’t reduce costs, win $1.8 billion in federal loan guarantees and raise $2 billion in fresh capital, Dow Jones said.
State Street Corp.’s State Street Bank and Trust, hired in August by a committee representing the UAL employee-owners to manage their investments, registered to sell 11 million of the 59 million UAL shares held for the workers, according to Dow Jones. UAL said in a regulatory filing Friday that State Street has begun selling the shares on the open market. (See State Street Selling UAL Stock ).
State Street determined that being solely invested in UAL stock was ” inconsistent” with federal pension laws governing employee stock ownership plans, the International Association of Machinists union said in a note to members, Dow Jones said.
However, State Street is constantly reviewing the decision and can decide to halt the sales or buy back the stock, said the union representing about 35,000 United workers.
The UAL stock sold on behalf of the employees is sold on a proportionate basis from all participants’ accounts, and proceeds and any earnings related to the sales are also credited to their accounts proportionately, the machinists union said. State Street, the union said, is investing the proceeds in a short- term investment fund, according to the report.
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