* Ch 11 protection to stem litigation costs
* Circor to record $28.8 mln charge
* Circor shares up 5.5 pct
(Recasts; Adds details, background, share movement)
July 12 Industrial machinery maker Circor
International Inc (CIR.N) put its valve manufacturing
subsidiary Leslie Controls Inc under bankruptcy protection in a
bid to isolate and resolve asbestos-related personal injury
Shares of Circor were up as much as 5.5 percent on Monday
as the pre-negotiated court protection helps the company reduce
costs and removes a big overhang on the stock.
"The cost of this defense has exceeded the profits
generated by Leslie's operations," said Bill Higgins, chief
executive of Circor.
Circor will record a charge of $28.8 million in the second
quarter due to the bankruptcy.
Circor will also record $5 million of post-bankruptcy
charges mostly in the third quarter, the company said in a
conference call with analysts.
Since 2002, Leslie has been named in a number of
asbestos-related personal injury claims relating primarily to
the use of asbestos on U.S. Navy ships from the 1940s to the
1980s -- prior to Leslie's integration into Circor.
It currently has about 1,307 pending asbestos personal
injury claims against it, court papers show. Between 2006 and
2009, gross indemnity and defense costs totaled $54.1 million
for the company.
Leslie Controls is the third company in less than two
months to use the U.S. Bankruptcy Code to resolve its asbestos
Last month, EnPro Industries Inc's (NPO.N) Garlock Sealing
Technologies LLC subsidiary and two units of RPM International
Inc (RPM.N) also filed for bankruptcy to resolve
asbestos-related lawsuits. [ID:nSGE65D0IN]
Asbestos, once widely used in manufacturing, has been
partially banned by the U.S. government after it was proven to
cause cancer, often in people who were exposed by breathing in
According to the bankruptcy plan, a new trust will be
created to handle all current and new litigation claims
providing both Leslie and Circor with permanent court
protection from such claims, the parent company said in a
Funding for the trust will consist of a $75 million
contribution by Leslie and Circor, and proceeds from Leslie's
remaining asbestos insurance assets.
Leslie, which employs 178 people and recorded net revenue
of over $35 million in 2009, could exit bankruptcy in 120 days,
Circor said in a statement.
In its Chapter 11 petition, Leslie, which makes process
control valves, listed assets in the range on $10 million to
$50 million and liabilities of $50 million to $100 million.
Shares of Circor were up $1.03 at $27.39 Monday on the New
York Stock Exchange. They touched a high of $27.81 earlier.
The case is In re: Leslie Controls Inc, U.S. Bankruptcy
Court, District of Delaware (Delaware), No: 10-12199.
(Reporting by A.Ananthalakshmi and Santosh Nadgir in
Bangalore; Editing by Prem Udayabhanu)