CHARLOTTE, N.C.--EnPro Industries, Inc. (NYSE: NPO) today announced that it has entered into a definitive settlement agreement with workers’ compensation boards for each of the ten Canadian Provinces (the “Provincial Boards”) to resolve current and future asbestos claims. The agreement resolves all claims against EnPro and certain of its subsidiaries, Garlock Sealing Technologies LLC (“GST”), Garrison Litigation Management Group, Ltd., Coltec Industries Inc (“Coltec”), and Garlock of Canada Ltd (collectively referred to as the “EnPro Parties”), for recovery of a portion of amounts the Provincial Boards have paid and will pay in the future under asbestos-injury recovery statutes in Canada. An agreement for the resolution of these Canadian claims has been a condition to EnPro, Coltec and GST’s obligations to proceed with the March 2016 comprehensive settlement (the “Comprehensive Settlement”) reached with the court-appointed committee representing current asbestos claimants, the court-appointed legal representative of future asbestos claimants in GST’s asbestos claims resolution process pending in the U.S. Bankruptcy Court for the Western District of North Carolina (the “Bankruptcy Court”), and representatives for current and future asbestos claimants against Coltec. As contemplated by the Comprehensive Settlement, GST and Coltec have filed a modified joint plan of reorganization (the “Joint Plan”) with the Bankruptcy Court, which set December 9, 2016 as the deadline for asbestos claimants to vote on approving the Joint Plan.
The settlement agreement provides for an aggregate cash payment to the Provincial Boards of U.S. $20 million, payable on the fourth anniversary of the effective date of the Joint Plan. After the effective date of the Joint Plan, the Provincial Boards will have the option of accelerating the payment, in which case the amount payable would be discounted from the fourth anniversary of the effective date of the Joint Plan to the payment date at a discount rate of 4.5% per annum. This is consistent with the present value estimate of approximately $17 million, before tax, that EnPro has previously announced as the amount committed for the resolution of these claims. In return, the Provincial Boards have separately agreed to release EnPro, any of EnPro’s affiliates and the settlement trust to be established under the Joint Plan from any liability for any present or future asbestos-related claims by the Provincial Boards and to provide, among other protections, a covenant not to sue EnPro, any of EnPro’s affiliates or the settlement trust with respect to any such claims.
The settlement agreement will not become effective unless the Bankruptcy Court enters an order approving it or concluding that Bankruptcy Court approval is not necessary for the EnPro Parties to the Agreement that are not debtors under the Joint Plan to enter into and consummate the settlement agreement. The settlement agreement further provides that it is not binding on any of the EnPro Parties unless and until the effective date of the Joint Plan shall have occurred.
“We are pleased to announce the definitive agreement that we reached with the Canadian Provincial Boards to resolve all current and future asbestos claims against EnPro and certain subsidiaries. This is yet another key milestone in our efforts to cleanse EnPro and its subsidiaries of the legacy asbestos claims that have plagued the company since its spinoff from the Goodrich Corporation in 2002. We remain on track to reconsolidate GST into EnPro in the third quarter of 2017 and are looking forward to closing this chapter of EnPro’s history. We are diligently planning for EnPro’s next chapter and are excited about sharing that with our shareholders before the expected reconsolidation next year,” said Steve Macadam, President and Chief Executive Officer.
Forward Looking Statements
Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that the Joint Plan may not obtain necessary approval by asbestos claimants or the Bankruptcy Court or the United States District Court, the settlement agreement with the Provincial Boards may not be approved by the Bankruptcy Court and the Bankruptcy Court may determine that its approval is required for the consummation of such settlement agreement by any of the EnPro Parties, the actions and decisions of creditors and other third parties that have an interest in the bankruptcy proceedings, the terms and conditions of any reorganization plan that is ultimately approved by the Bankruptcy Court, delays in the confirmation or consummation of the Joint Plan, risks with respect to the receipt of consents necessary to effect the corporate restructuring of Coltec contemplated by the Comprehensive Settlement, and risks and uncertainties affecting the ability to fund anticipated contributions under the Joint Plan as a result of adverse changes in results of operations, financial condition and capital resources, including as a result of economic factors beyond EnPro’s control. EnPro’s filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2015 and Form 10-Q for the period ended March 31, 2016, describe other risks and uncertainties. Except as may be required by law, EnPro does not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.
About EnPro Industries
EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company’s website at http://www.enproindustries.com.