AK Steel Holding said Monday it would create a $663 million healthcare trust as part of a lawsuit settlement with retirees, sending its shares up more than 10 percent.
The settlement with the retirees at its Middletown, Ohio plant will see the steel maker contribute $468 million initially to the Voluntary Employees Beneficiary Association, followed by three annual contributions of $65 million each.
The deal, which covers 4,600 Middletown Works retirees, settles a lawsuit stemming from 2006 initiatives by AK Steel to reduce its retiree health care costs, the company said in a statement.
The company expects to fund its initial $468 million contribution to the trust through existing cash balances and credit lines.
Shares of AK Steel surged $4.35 to to $47.33 in early trade on the New York Stock Exchange.