Bill aids CCK
by: phillycck (27/M/Boulder, CO)
Long-Term Sentiment: Strong Buy 12/13/01 07:35 am
Msg: 7576 of 7639
A bill that could save Crown Cork & Seal Inc. millions of dollars in asbestos-litigation claims was passed yesterday by the Pennsylvania House of Representatives and now goes before Gov. Schweiker.
The House passed the bill, which amends the state's corporation law, by a 168-30 margin. It passed the Senate by 44-5 on Tuesday. The governor is expected to sign it.
The new law is designed to freeze asbestos liability for companies in mergers to the "fair market value" at the time a company that made or used an asbestos product was acquired. The measure applies to companies incorporated in Pennsylvania before May 1, 2001.
In Crown Cork's case, the bottle caps, beverage and food container manufacturer paid $7 million in 1963 for Mundet Cork Co., but to date has paid far more than $7 million in asbestos claims.
There has been speculation that Crown Cork, of Philadelphia, may have to file for bankruptcy protection, in part because of its asbestos exposure. Shares in the company rose 20 cents to close at $1.85 yesterday in trading on the New York Stock Exchange.
"We are extremely thankful for the efforts of the many legislators who supported this enactment," said Tim Donahue, Crown Cork's senior vice president for finance.
"They recognized the fundamental unfairness in the entire process as it relates to a situation like Crown's, where we only owned a company a short period of time."
The measure, supported by House Majority Leader John M. Perzel (R., Phila.), Sen. Michael J. Stack (D., Phila.), and others, does not mention Crown Cork by name, but was drafted with the company in mind.
Donahue said Crown Cork sold Mundet Cork's insulation division 93 days after it purchased the company, but retained Mundet's bottle-cap operation.
The Mundet insulation business allegedly used products containing asbestos, which poses health risks to workers who breathe in its fibers. This has opened the door for asbestos-related lawsuits against Crown Cork. In recent years, Crown Cork, which employs 450 workers in Philadelphia and 1,000 in Pennsylvania, has been hit with an avalanche of them.
During the first nine months of this year, the Philadelphia packaging company paid $88 million to settle asbestos claims. Crown Cork lost $54 million during the nine months ended Sept. 30 due to "declining profitability and higher borrowing cost because of lenders' uncertainty over asbestos litigation," Donahue said.
Over the last three years, the company has taken charges totaling $535 million.
"The law is designed to protect companies like Crown who were never involved in the manufacture of such products, but are the recipient of this liability because of corporate succession," Donahue said.
Perzel said: "When Gov. Schweiker signs this bill, Crown Cork & Seal will have a better chance to survive in its battle against the legal predators whose actions threaten its very existence. Without this legislation, we stand to lose this company, and send a signal to other companies that Pennsylvania will not stand up for them when it counts."
Stack, who represents Northeast Philadelphia, where Crown Cork has its headquarters, told Senate colleagues on Tuesday that Cork Cork contributes $1 billion to the state economy and "is teetering on the brink of bankruptcy."
He also told them: "Crown Cork faces these lawsuits and this dire financial situation, despite the fact the company never manufactured, sold or installed a single asbestos product in its 100-year history." |
