ZURICH, Switzerland, Jan 17, 2003 — ABB and its U.S. subsidiary Combustion Engineering (CE) Friday announced they had agreed upon a pre-packaged bankruptcy plan for CE with representatives of asbestos plaintiffs, a significant milestone in the process to resolve CE’s asbestos liability.
The agreement in principle on a pre -pack asbestos bankruptcy plan for CE was reached with the proposed futures representative, David Austern, as well as with attorneys who ABB and CE expect to act on behalf of a sufficient number of current claimants to approve the plan.
A trust, set up under the plan, will handle claims filed after a pre-packed Chapter 11 reorganization has been approved in court. Once documentation on the agreement in principle has been completed, the plan will be subject to a vote by asbestos claimants. ABB and CE expect to send the plan out for vote early next week.
If sufficient claimants approve the pre -pack Chapter 11 plan, it will be filed in bankruptcy court for final approval. Under the agreement, the value of Combustion Engineering on the due date will be made available for the payment of asbestos claims. At the end of September 2002, CE’s value was US$ 812 million. In addition, ABB agreed to provide an enhanced payment for the benefit of claimants in the form of ABB stock and cash.
The cash payments are to be made in pre -agreed installments from 2004 to 2009. These cash payments for CE’s asbestos liability could total up to US$ 350 million, comprised of US$ 250 million that are not dependent upon ABB’s future performance and US$100 million that are performance-related.
An additional US$ 50 million in ABB stock will also be contributed at specified prices prevailing during the last quarter of 2002.
With this agreement, CE and ABB are on schedule to file a pre -pack bankruptcy case in court for CE before the end of February, aiming to provide final closure to the asbestos problem to CE and all ABB affiliates, including ABB Ltd.
ABB (www.abb.com) is a provider of power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impacts. The ABB Group of companies operates in more than 100 countries and employs about 146,000 people.