BENTON HARBOR, Mich. (AP) -- Home appliance maker Whirlpool Corp. said Wednesday that its Brazilian subsidiary will pay $603 million to Brazilian bank Banco Safra S.A. to settle a legal dispute in Brazil that has spanned two decades.
Whirlpool will log a $439 million charge in the second quarter for expenses related to the agreement, the company said.
Whirlpool shares fell $3.22, or 4.2 percent, to $74 in extended trading. The stock lost 82 cents to close at $77.22 in the regular session, before the settlement was announced.
In 2000, a Brazilian trial court ordered Whirlpool's Brazilian subsidiary to repay an unauthorized loan that had been taken out by a former employee of Embraco, a company that was acquired by the subsidiary. Despite the judgment, the final payment amount continued to be disputed, leading to the settlement announced this week.
Under the settlement, Whirlpool will give Banco Safra two payments -- the first consisting of 469 million reals (about $295 million) in the third quarter of this year, and the second of 490 million reals (about $308 million) in the first quarter of next year.
The total amount falls within the range that Whirlpool had already disclosed that it expected, the company said, which might have been as large as $1.1 billion. The company expects to pay for the settlement with cash on hand.
Whirlpool said a Brazilian court must approve the deal, and it believes this will happen in the next month.
Whirlpool expects the settlement to eat into its second-quarter net income by $290 million, or $3.70 per share. The company now expects net income of $8.30 to $9.30 for the year. It had previously forecast a profit of $12 to $13 per share.