UPDATE 1-Asbestos claims lead RPM Int'l units to bankruptcy
* More than 10,000 asbestos lawsuits filed
* No agreement with claimants prior to filing
* Shares of RPM slip 0.9 percent (Adds comment from attorney for asbestos claimants)
By Tom Hals
WILMINGTON, Del., June 1 (Reuters) - Two subsidiaries of RPM International Inc (RPM.N) filed for bankruptcy as the chemical company seeks to resolve thousands of asbestos-related lawsuits, according to court documents.
The parent company also asked the bankruptcy court for an injunction to prevent it from becoming a target of plaintiffs who brought asbestos lawsuits against the bankrupt subsidiaries, according to court documents filed on Monday.
The bankrupt subsidiaries -- Specialty Products Holding Corp and Bondex International Inc -- plan to use Chapter 11 to establish a trust for the payment of asbestos-related claims.
However, the companies did not enter bankruptcy with a negotiated plan or outline of a settlement for claimants, and one plaintiff attorney said he was "very troubled" by the "motives and purpose of the bankruptcy filing."
Specialty Products Holding is a direct parent to operating companies, that produce coatings and finishings, including DayGlo Color Corp, the world's largest producer of daylight florescent pigments.
The operating companies and RPM International are not part of the bankruptcy.
Specialty Products Holding said in a statement that it had a commitment for $40 million from Wells Fargo Capital Finance to fund its bankruptcy. The company listed assets and liabilities of $100 million to $500 million.
The two bankrupt subsidiaries also want a permanent injunction against any further asbestos claims related to products they made or sold.
"This action has been taken to once and for all resolve the asbestos-related Bondex legacy liability," Frank Sullivan, RPM's chairman and chief executive officer, said in a statement.
Many of the alleged asbestos liabilities, at the heart of more than 10,000 lawsuits against the bankrupt subsidiaries, stem from Reardon Co, which was acquired in 1966. Reardon sold home patch and repair products that contained asbestos until 1977.
Asbestos is a naturally occurring mineral that was once widely used in manufacturing. It has been banned by the U.S. government after it was proven to cause cancer, often in people who were exposed by breathing in asbestos particles.
The bankrupt subsidiaries had fiscal year 2009 revenue of $329 million and pretax income of $19 million, which is less than 11 percent of RPM's consolidated total.
Until 2003, insurance covered 90 percent of the asbestos-related costs, according to court documents. Since then, insurers have claimed exhaustion and have stopped making payments.
In addition, after many other companies with asbestos liabilities filed for bankruptcy, Specialty Products Holding and Bondex become more attractive as litigation targets, according to the court documents.
In the period 2005 to 2009, the bankrupt subsidiaries incurred asbestos costs of $60 million to $82 million annually, up from $8.2 million in 2000.
Joseph Belluck of Belluck & Fox, which is suing Bondex, said that recently, many companies facing asbestos claims and filing for bankruptcy have negotiated the terms of a trust or settlement prior to entering Chapter 11.
"Of the recent vintage (of bankruptcy filings), all companies with asbestos liabilities have done it with an agreement with plaintiffs' counsel," said Belluck.
"The fact of the matter is, these companies sold products that killed people and these companies should be held liable."
Shares of RPM International were down 18 cents to $19.63 in early-afternoon trading on the New York Stock Exchange.
The case is In re Specialty Products Holding Corp, U.S. Bankruptcy Court, District of Delaware, No. 10-11780. (Reporting by Tom Hals; Editing by Tim Dobbyn and John Wallace)
- Sierra Leone declares emergency as Ebola death toll hits 729 |
- Israel, Palestinian militant groups begin three-day Gaza truce |
- Disappointment, uncertainty after India blocks WTO trade deal
- Tesla expects to boost 2015 output to more than 60,000
- Tea Party out-muscles Boehner on border-security funding