Sealed Air to foot €700m asbestos payouts
current and future asbestos-related claims and the pending
fraudulent transfer claims made against it and its affiliates in
connection with the 1998 transaction in which Sealed Air acquired
the Cryovac packaging business from W.R. Grace.
US packaging company Sealed Air has agreed to resolve all of the current and future asbestos-related claims and the pending fraudulent transfer claims made against it and its affiliates in connection with the 1998 transaction in which Sealed Air acquired the Cryovac packaging business from W.R. Grace.
The pending settlement calls for the company to contribute 9 million shares of Sealed Air common stock. The pending settlement also calls for the payment of $512.5 million (€516.5m) in cash plus interest, at 5.5 per cent annual rate, starting on 21 December 2002 and ending on the effective date of the W.R. Grace plan for reorganisation. The cash payment will be made in full at that time. Sealed Air said it will not seek indemnity from Grace for payments made under this agreement. The total payouts are estimated to amount to $700 million.
The agreement also provides for full protection of Sealed Air from any and all claims against the company by Fresenius Medical Care related to the W.R. Grace transactions.
The agreement is subject to Sealed Air and its affiliates receiving the US Bankruptcy Code law. This provides that all asbestos-related claims against Sealed Air would be channelled to a trust to be established as part of W.R. Grace's plan of reorganisation that will make payments to asbestos claimants on behalf of Grace. The agreement is also subject to the approval of Sealed Air Corporation's Board of Directors and the Asbestos Personal Injury and Asbestos Property Damage Creditors Committees in the W.R. Grace bankruptcy proceeding. Approval will be sought by the respective parties no later than 6 December 2002. The agreement is also subject to execution of a definitive settlement agreement.
William Hickey, president and chief executive officer of Sealed Air, stated that: "This agreement in principle provides Sealed Air with finality and certainty as we put the Grace-related issues behind us. We believe that reaching this timely and manageable settlement is in the best interests of our shareholders and our business. Sealed Air will continue doing what we do best: providing superior, innovative packaging products and solutions that add value to our customers around the world."
Analysts largely agreed that the outcome was inconclusive, but a number of other companies with asbestos-related law cases pending saw their share prices increase in response to the Sealed Air announcement. Other packaging companies which have recently been battling asbestos cases include French aluminium packaging specialist Pechiney and American beverage packaging giant Crown Cork & Seal.
Sealed Air Corporation is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems, including such widely recognized brands as Bubble Wrap air cellular cushioning, Jiffy protective mailers and Cryovac food packaging products.
