Chemical maker W.R. Grace & Co. said Thursday it will adjust the estimated cost of settling its asbestos-related liabilities to $2 billion from the previous estimate of $1.7 billion.
The increase reflects higher estimated values of a common stock warrant and deferred payment obligations to be paid to a trust to compensate personal-injury claimants and property owners under the company's bankruptcy reorganization. The company filed for Chapter 11 protection in 2001, partly as a result of asbestos-related lawsuits filed by residents of Libby, Mont., and others.
The Columbia-based company said it will take a lower-than-expected $365 million, non-cash pre-tax charge in its fourth quarter earnings, but, as a non-cash charge, it will not reduce adjusted earnings per share or adjusted earnings before interest and taxes. The company will release its quarterly earnings Feb. 6.
In a November call with analysts, Grace officials had said they would be adjusting asbestos-related liabilities on the company's balance sheet. The warrant's value is estimated at $490 million, the maximum under a cash settlement agreement with the trust, which won bankruptcy court approval in December. The value of the company's deferred payment obligation has increased as well, to $547 million, due to improved borrowing costs and the expected emergence from bankruptcy this year.
The ultimate cost of settling the asbestos liability could vary from the current estimate because it will be based on the values at the time the company emerges from bankruptcy, Grace said.