W. R. Grace & Co. (GRA: Quote) announced Thursday that it will adjust its recorded asbestos-related liability to $2.065 billion from the previous amount of $1.700 billion. The company said it will report a $365 million non-cash, pre-tax charge in its fourth quarter 2012 earnings.
The company noted that the non-cash charge will have no impact on Adjusted EBIT or Adjusted earnings per share.
As discussed in the company’s November 9, 2012 teleconference with analysts, an adjustment to the recorded amount is now necessary to reflect the increased estimates of the settlement values of the warrant and deferred payment obligation payable to the asbestos personal injury trust under Grace’s plan of reorganization, the company said.
The company currently estimates the warrant’s value to be $490 million, the maximum value under the company’s cash settlement agreement with the asbestos trust. The cash settlement agreement was approved by the bankruptcy court on December 17, 2012.The company currently estimates the deferred payment obligation’s value to be $547 million. The increase in the estimated value of the deferred payment obligation reflects the company’s improved borrowing costs and the expected timing of its bankruptcy emergence.
The non-cash charge of $365 million is lower than the range of $375 million to $475 million that the company had estimated in November.
The company said it will release fourth quarter 2012 earnings before market open on February 6.
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by RTT Staff Writer
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