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Bloomberg
General Electric Co poured $4 billion into repairing its balance sheet, furthering steps to whittle down a pension liability that has been a thorn in Chief Executive Officer Larry Culp’s turnaround efforts.
The manufacturer prefunded about $2.5 billion in pension requirements for the next three years and repaid $1.5 billion of an intracompany loan to GE Capital, according to a statement. Culp cited GE’s existing forecast for at least $2.5 billion in industrial free cash flow this quarter and positive cash flow next year.
“These steps further reduce debt, de-risk our balance sheet, and put us on stronger financial footing to accelerate GE’s transformation,†Culp said in the statement. The actions and scheduled fourth-quarter maturities mean GE will reduce debt by about $14.5 billion this year and by roughly $28 billion since the beginning of 2019, the company said.
Pension liabilities have been among the most stubborn issues complicating Culp’s two-year tenure leading the Boston-based company. GE froze pension benefits for more than 20,000 employees late last year and finished 2019 with about $23 billion in underfunded pension liabilities.
GE made progress in this year’s third quarter, reporting a surprise profit and the rebound in cash flow that allowed the company to take the actions. GE previously announced it would prefund $4 billion to $5 billion this year to meet minimum pension funding requirements.