Chemical manufacturer W.R. Grace & Co. is to set up a trust fund containing up to $3 billion, to be used for settling current and future asbestos-related claims against the company. The agreement includes hundreds of millions in cash, as well as warrants for ten million stock shares at $17 each.

This new agreement, along with the recent $250 million payment to the US federal Superfund for the ongoing clean-up of Libby, Montana, will eventually allow W.R. Grace to emerge from bankruptcy without the burden of any future asbestos liability claims.

W.R. Grace & Co. manufactured asbestos-containing products from 1938 through to the 1970s. The company also owned and operated a vermiculite mine in Libby that was contaminated with asbestos. Millions of homes throughout the country contain Zonolite, an insulation product containing the contaminated vermiculite, and thousands of Libby residents have developed asbestos-related diseases such as mesothelioma and asbestosis as a result of working in or living near the mine.

Under the terms of the settlement, W. R. Grace will pay an initial sum of up to $1.8 billion into the trust fund. An additional sum of up to $1.55 billion will be paid into the fund between 2019 and 2034. The fund will be further supplemented by the addition of stock options. The chemical company also agreed that its remaining insurance coverage would also be added to the fund.

The money will be used to settle claims of victims of the company’s asbestos products, including the contaminated insulation.

The settlement announcement was made during a scheduled bankruptcy hearing before Judge Judith Fitzgerald, who has been presiding over the W.R. Grace bankruptcy case. The plan must be approved by Judge Fitzgerald before the company can begin to emerge from bankruptcy.

There will still be more trouble to come for W.R. Grace & Co. even after the bankruptcy case is settled. The company, as well as six of its former executives, still faces criminal charges relating to the contamination of Libby. The company may face fines of up to $280 million, and the individuals may face prison terms of up to fifteen years, if convicted.

Meanwhile, W.R. Grace & Co. shares rose by $2.34 to reach a value of $27.19 within just a few hours of the news of the company’s bankruptcy deal.

This entry was posted on Monday, April 21st, 2008 at 5:12 pm and is filed under Asbestos Exposure, Asbestos Litigation, Montana. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.