ABB asbestos settlement finalised
Ten years of legal wrangling over asbestos claims in the United States seem over for Swiss firm ABB after no appeals were lodged against a settlement plan.
The electrical engineering giant said that no appeals had been filed with a US district against its $1.43 billion (SFr1.86 billion) plan within the required 30-day period.
The company announced on Saturday that the finalisation of the settlement now cleared the way for claimants to receive their payments. It also ends the uncertainty that has dogged ABB for over a decade.
The decision will protect the firm against any current or future claims against its Combustion Engineering unit, which faced more than 100,000 lawsuits from people who were exposed to products such as asbestos-insulated boilers.
“This is a milestone in the history of ABB,” said chief executive Fred Kindle. “We are very glad to have a resolution of this important issue, which removes significant uncertainty that has harmed ABB over the years.”
Under the settlement plan, the company will set up a trust that will out current and future claimants in cash and ABB shares. According to Kindle, the plan brings benefits to both parties.
A much smaller number of asbestos claims against another US subsidiary – ABB Lummus Global – are in the process of being resolved. In September 2005, 96 per cent of the claimants voted in favour of a settlement plan.
On the brink
ABB came to the brink of financial collapse earlier this decade.
Spiralling asbestos claims and an acquisition spree left it weighed down with around $10 billion in debt just as demand for its power systems and industrial robots was hit by the economic downturn.
ABB has since managed a turnaround by focusing on power technology and automation technology and returned to profitability in 2005.
The end to litigation had been expected for the past year. The engineering group’s original settlement proposal was rejected in 2004 after a California lawyer opposed the plan.
The company then reworked the plan, adding an extra $232 million to the package.
The perspective of a settlement has helped boost ABB’s share value, which doubled last year and has gained 30 per cent in 2006
The firm’s future looks better too, with strong demand for electrical engineering equipment in China and the US expected to boost ABB’s profits.
In 2005, ABB posted it first net profit ($735 million) after four years of losses.
swissinfo with agencies
In 1990 ABB bought US firm Combustion Engineering, that had produced boilers lined with asbestos in the 1970s, despite the fact that Combustion was already facing limited asbestos litigation.
Lawsuits skyrocketed in the mid-1990s and in February 2003 Combustion filed for bankruptcy protection since its asbestos liability was expected to exceed the company’s book assets of $812 million.
ABB proposed a $1.2 billion trust fund to cover future claims, including cash and shares, but this was rejected by a court in December 2004 because of the inclusion of Lummus Global in the package.
ABB increased its offer by $232 million the following March, which wiped out profits posted in 2004. On February 28 a US district court in New Jersey finally approved the settlement pending a 30-day period when objections can be submitted.
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