GERMANY – Logistics company Deutsche Post says it will use the proceeds of its recent initial public offering to cut its pension obligations.
The company last month sold stock and an exchangeable bond in its consumer-banking arm Postbank in Germany’s largest IPO since 2000.
“Deutsche Post generated total income of around 2.6 billion euros, from this transaction, which will be used to reduce pension obligations in particular,” the group said today.
According to its interim report provisions for pensions and other employee benefits rose to 6.41 billion euros as at the end of June this year - up from 6.35 billion euros at the end of 2003.
And in its 2003 annual report it disclosed that its present value of pension obligations as at December 31 2003 was 7.03 billion euros.
Deutsche Post said in that report that it believed “that pension provisions in Germany represent capital that the company has at its long-term disposal”.
It added: “All of the company’s pension provisions are covered by operating assets. Therefore, there is no underfunding, as can happen at Anglo-American companies, when pension provisions are taken off the balance sheet and transferred to an external pension fund.”
The comments were in response to Standard & Poor’s downgrading its long-term debt rating after the agency changed the way it looked at pension liabilities.