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ABB plan aims to limit damage

Asbestos was commonly used as fire-proofing until the 1970s (Fisher Environmental) Asbestos was commonly used as fire-proofing until the 1970s (Fisher Environmental)

Embattled engineering firm ABB has revealed plans to put a limit on its United States asbestos liabilities which have threatened to push the group into bankruptcy.

This content was published on November 1, 2002 - 22:23

ABB's proposals include bankruptcy protection for its US subsidiary Combustion Engineering (CE) by reorganising CE under Chapter 11 of the US bankruptcy code.

The group hopes to limit its asbestos payments to SFr1.7 billion ($1.1 billion), which is much less than analysts had feared.

"We are very confident that we will make progress to get the settlement approved," said ABB Chief Financial Officer Peter Voser, adding a settlement would solve the problem of asbestos once and for all for ABB and its units.

The Swiss-based firm said that it was in talks with representatives of plaintiffs and estimated that the claims would be met by CE's $812 million in assets and another $300 million paid out over a period of several years.

ABB has provisions for asbestos liabilities of $940 million.

ABB shares closed down almost 15 per cent at SFr1.68 in Europe before the news.

The rating agency, Moody's, on Thursday downgraded ABB by two notches to junk-bond status.

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