U.S. District Court OKs W.R. Grace Reorganization
COLUMBIA, Md. (AP) — W. R. Grace & Co. said Tuesday that a U.S. District court affirmed its reorganization plan, putting the chemical maker a step closer to emerging from bankruptcy protection after more than a decade under court supervision.
The company originally filed for bankruptcy protection in April 2001 so it could resolve its asbestos-related liabilities. Its reorganization plan was confirmed by a bankruptcy court in January, but still had to be affirmed by the U.S. District court in Delaware before it could take effect.
The plan, which still could be subject to further appeals, establishes two asbestos trusts to compensate personal injury claimants and property owners. They will be funded by a variety of sources including cash, rights to purchase Grace stock, deferred payment obligations, insurance proceeds and payments from third parties, the company said.
The trusts are designed to cover all current and future asbestos claims. At the time Grace filed for bankruptcy protection, the company said it had been named in 110,000 asbestos personal injury claims.
"I am optimistic that the legal process related to our joint plan is coming to an end and we can emerge in the near future," Fred Festa, Grace's chairman and CEO, said in a statement.
The timing of Grace's emergence depends on a number of factors, including whether there are further appeals to the joint plan and if the company can emerge with those appeals outstanding, the company said.
Separately, Sealed Air Corp., which bought Grace's Cryovac business in 1998, said Tuesday that it's ready to make its payment into the trusts.
The food packaging company's payment includes cash and 18 million shares of common stock. As of Sept. 30, the total cash payment would have been about $820 million, which includes the settlement amount of $512.5 million and about $308 million of accrued interest, the company said.
Sealed Air said it plans to fund a substantial part of the payment with available cash, with the rest coming from its credit facilities.
In midday trading, shares of W.R. Grace rose 25 cents to $53.09, while Sealed Air shares rose 26 cents to $19.83.