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PHILADELPHIA-Tasty Baking Co. has paid $4.7 million to buy its production plant at 2801 Hunting Park Ave. back from its pension plan. The locally based maker of Tasty Kake deeded the facility to its pension plan in 1960 in order to reduce taxes and has been leasing the plant ever since.

Such arrangements were disallowed, except by an approved exception, under the 1974 Employee Retirement Income Security Act. Tasty Baking obtained the required exemption. However, due to more favorable interest rates, by replacing the capital lease with ownership now, the company expects a decrease in annual interest expense of approximately $50,000.

While reducing the interest expense, “the purchase also injects cash into the pension plan in order to improve the funded status of the plan for our retirees,” says David S. Marberger, SVP and CFO, in a statement. Mary Borneman, manager of investment relations, tells GlobeSt.com the fund supports approximately 2,000 retirees. She is unsure of the amount of space in the five-story facility, which is located on three acres, and will continue to operate as before.

The repurchase is funded by a term loan and mortgage, which were secured in September in conjunction with the refinancing of the company’s credit facility. Tasty Baking, which makes snack cakes, pies, cookies and donuts, was founded in 1914. It has manufacturing facilities here and in Oxford.

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