W.R. Grace Settles Asbestos Claims For $3 Billion
Tue, 04/08/2008 - 6:10am
HELENA, Montana (AP) -- W.R. Grace & Co. said it has reached an agreement to resolve current and future asbestos claims against the company, which would allow it to emerge from bankruptcy without further obligations for asbestos injury.
Attorneys for the plaintiffs on Monday valued the agreement at $3 billion (euro1.91 billion) in cash and equity.
''The victims of asbestos poisoning and asbestos cancer have walked a long path to reach justice,'' said John D. Cooney, an attorney for the plaintiffs and a member of the committee that negotiated the agreement, which came as part of Grace's bankruptcy proceeding. ''Certainly nothing can replace the family members who have been lost as a result of their exposure to asbestos, but today's settlement represents a fair resolution for both the victims and Grace.''
In the northwestern Montana town of Libby, asbestos contamination from a former W.R. Grace vermiculite mine has been blamed for sickening hundreds of people, some fatally. Their claims represent about 1 percent of the total number filed against the chemicals and building materials supplier over products that contain asbestos, and their attorney voted against the agreement.
''Libby had one seat on the 11-member committee,'' said Jon Heberling, the Kalispell attorney who represented Libby residents during the negotiations. ''We actually voted against it because it was too uncertain for Libby. Grace made no special provision for Libby.''
Monday's agreement calls for the company to pay $250 million (euro159.31 million) in cash into a trust fund for asbestos victims, followed by deferred payments of $110 million (euro70.09 million) per year for five years beginning in 2019 and $100 million (euro63.72 million) per year for 10 years beginning in 2024.
Other contributions to the trust fund are $1.2 billion (euro760 million) from Sealed Air Corp. and $100 million (euro63.72 million) from Fresenius Medical Care Corp., both formerly affiliated with Grace. The trust will be able to file claims against $917 million (euro584.34 million) in product liability insurance purchased by Grace, company spokesman Bill Corcoran said.
The trust fund will also have the right to acquire 10 million shares of common stock at $17 per share during the first year after the company emerges from bankruptcy. The profits are to be placed in the trust fund.
''This agreement in principle is a very important step in emerging from Chapter 11,'' Grace Chairman Fred Festa said in a statement.
At the time Grace filed for bankruptcy protection in April 2001, the company said it had been named in 110,000 asbestos personal injury claims. Cooney, whose law firm represents asbestos plaintiffs, noted that many more individuals have been diagnosed with asbestos disease since then and it was unknown how many would file claims with the trust.
Festa said he believes the company will be able to emerge from bankruptcy late this year or early next year, at which point the trust fund would be set up and trustees appointed.
A majority of the asbestos injury claims against Grace are related to a spray-on fireproofing product the company manufactured, Corcoran said.
From 1923 to the early 1990s, millions of tons of the asbestos-contaminated vermiculite ore were shipped from the mine near Libby to about 270 processing plants across the United States for use in insulation, fireproofing, gardening and other products.
Gayla Benefield, who has lived in Libby for 63 years, said she feared the agreement was a way for Grace to ''look like the good guy.''
''If Grace does something voluntarily, I'm highly suspicious,'' she said, adding that she and many of her family members suffer health effects from asbestos exposure and she lost both parents to asbestos-related diseases.
Benefield said she was concerned that Libby residents might not receive their due.
''The people of Libby, we were right here when the product came out of the mine,'' Benefield said. ''We were the ones who were poisoned, as were our children and grandchildren. Our lives have been completely and totally ruined -- generations of us. Once this is done, we will have no recourse. If we get $3,000 (euro1,900) apiece, we're stuck with that.''
Heberling, the attorney representing Libby plaintiffs, said the settlement ''determines the size of the pie, but we still have to negotiate Libby's slice of that pie.''
He declined to say how much money he will be seeking for Libby residents but did say each person would get a different amount.
''It depends on their disease,'' he said. ''For instance, mesothelioma cases get more (and) lung cancer gets more.''
Heberling said about 225 asbestos deaths have been confirmed in Libby, and a clinic in the community, the Center for Asbestos-Related Disease, is following about 2,000 additional asbestos cases.
The agreement was announced Monday during a hearing before bankruptcy Judge Judith Fitzgerald in Pittsburgh. She must still approve the agreement, which came less than a month after Grace announced it would reimburse the federal government $250 million (euro159.31 million) for the investigation and cleanup of asbestos contamination in Libby.
The agreement has no effect on the federal indictment against W.R. Grace and seven current or former executives, in which they are charged with conspiring to hide health risks associated with its Libby vermiculite mine, which closed in 1990. That case is pending in Missoula.
Grace is based in Columbia, Maryland. Its shares gained $1.98, or nearly 8 percent, to $26.83 Monday.