AT&T Aims to Fund Pension with $9.5 Billion in Shares

The telecom giant is seeking Department of Labor approval to fill its funding gap with AT&T stock worth nearly $10 billion. 

(October 19, 2012) – The largest phone company in the United States has a solution for its substantial pension shortfall: not cash, but company stake. 

AT&T submitted an application to the US Department of Labor to approve the move, according to Bloomberg, and hopes to secure the go-ahead before the end of 2013. 

At the end of 2011, AT&T had $10.2 billion in unfunded pension liabilities, according to its 10-K. 

The corporation stipulates that its defined-benefit pension fund must not dip below an 80% funded status, a threshold it is currently scraping by. However, the firm has just $9.89 billion set aside for other post-retirement liabilities (including health benefits), while its obligations amount to more than $30 billion. 

Corporate and private executives will occasionally post their personal company stake as collateral when their firm is seeking new loans, but the practice is not well regarded among investors or corporate professionals.