Grace to settle claims

Deal worth at least $60 million in case involving insulation

November 25, 2008|By Andrea K. Walker | Andrea K. Walker,

W.R. Grace & Co. said yesterday it has reached a deal worth at least $60 million to settle property damage claims filed by the owners of homes and businesses who used an attic and wall insulation manufactured by the Columbia chemical maker.

The attics were insulated with Zonolite, which contained vermiculite that was contaminated with asbestos. Asbestos is known to cause lung cancer and mesothelioma, a lethal tumor of the lining of the chest and abdominal cavities.

Under the deal, those who used the product can be paid 55 percent of the amount of damages they've claimed in the suit, according to documents filed with the Securities and Exchange Commission. No one filing a claim will be eligible to receive more than $4,125, according to the filing.

Grace will put $30 million in a 20-year trust the first year, then add $30 million more the third year. After the fifth year, the company will add $8 million a year to the trust if it falls below $10 million. Homeowners and businesses may file claims as long as the trust exists. The money is meant to cover costs to replace the Zonolite found in a home or business.

Grace said in the filing that it entered into the agreement Friday. It didn't specify how many people had filed claims. Government officials had estimated in the past that Zonolite has been installed in 15 million to 35 million homes and businesses.

In the past, Grace and the claimants had agreed that the shiny, featherweight insulation contains - and could release - asbestos fibers when disturbed. In dispute was whether the presence of the contaminated Zonolite in homes and businesses presents an "unreasonable risk."

Grace sought bankruptcy protection in 2001 over hundreds of thousands of claims related to asbestos.

In April, the company announced a settlement that could be worth $3 billion over time to end thousands of lawsuits by those who said they were sickened by exposure to asbestos products.

The personal injury lawsuit was "the big nut," in helping the company move closer to emerging from bankruptcy, Chairman Fred Festa said at the time. The company could come out of bankruptcy during the first half of next year.

Uncertainty over lawsuits has hurt Grace's growth for years. It faced 110,000 claims when it filed for bankruptcy.

Claims against Grace stem from asbestos in the company's building materials and fire protection products before 1973.

Grace also agreed this year to pay $250 million to remove contamination in Libby, Mont., where it mined and processed asbestos-contaminated vermiculite for 27 years. It was the largest settlement in the history of the federal government's Superfund program. Much of the town was contaminated and many of its residents died or became sick with asbestos-related diseases.

The company and some of its current and former executives still face criminal charges related to the Libby mine operation.

Shares of Grace rose 54 cents to close at $4.34 yesterday.

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