Swiss-based engineering firm ABB has suffered a setback over its plans to finalise a $1.2 billion (SFr1.4 billion) asbestos settlement in the United States.This content was published on December 2, 2004 - 21:32
On Thursday the Third Circuit Court of Appeals in the US threw out the plan, saying the settlement would have to be renegotiated by lower courts.
The news sent the share price tumbling at the stock exchange. At the opening of trading on Friday, ABB shares fell by 11.25 per cent to SFr6.25 ($5.43) from Thursday's close of SFr7.04.
The group's US-listed shares plummeted by 11.7 per cent to close at $5.45.
"It is a harsh blow for ABB," commented analyst Claude Zehnder at Zurich Cantonal Bank.
"We waited so long and now it was not approved," he added, referring to the fact that most market observers had expected the decision to be in ABB's favour.
ABB said it remained confident that a settlement would be reached.
“ABB is naturally surprised and disappointed at today’s decision, but remains confident that it can resolve... the asbestos liability within a relatively short time and without significant cost,” ABB spokesman Thomas Schmidt told swissinfo from the group's headquarters in Zurich.
The company added that it was considering its options, but "fully expected to resolve the issues which appear to have troubled the Third Circuit court”.
The asbestos settlement in the US centres on ABB’s bankrupt Combustion Engineering unit, which made industrial boilers insulated with asbestos material.
If accepted, the deal would settle the vast majority of claims made by more than 100,000 people suffering from the effects of exposure to asbestos.
But a number of claimant groups have lodged appeals against the company’s plans, and the settlement remains stuck in the courtrooms.
Investors have been waiting for a definitive US court ruling in the hope that it will end years of legal wrangling and allow ABB to complete a drastic overhaul, including the sale of businesses embroiled in the asbestos case.
ABB has been restructuring since 2002, when it almost collapsed under a multibillion-dollar debt mountain.
Outgoing CEO Jürgen Dormann took an axe to the company, slashing around 40,000 jobs and selling off “non-core” assets around the world.
But Thursday's ruling means it is now likely to be up to Dormann's successor, Fred Kindle, to steer the company through the next stage of settlement negotiations.
swissinfo with agencies
A US appeals court has sent ABB's $1.2 billion (SFr1.4 billion) asbestos settlement back to lower courts to be renegotiated.
But ABB said it would move quickly to resolve the problems raised by the court.
The Swiss-based engineering group said it was confident the settlement would be concluded without significant additional cost.
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