State asbestos bill for Crown Cork faces final vote
(UPDATE: Updates with final House vote, fresh quotes)
HARRISBURG, Pa., Dec 12 (Reuters) - The Pennsylvania state House of Representatives gave final approval on Wednesday to a measure limiting the asbestos liability of packaging leader Crown Cork & Seal Co. Inc. (NYSE:CCK - news).
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The 168-to-30 vote by the General Assembly's lower chamber sent the measure to Republican Gov. Mark Schweiker, who is expected to sign it in the coming days, an aide said. The measure won approval from the state Senate in a 44-to-5 vote late on Tuesday.
Crown, Cork & Seal had no immediate comment on the measure's passage. But supporters of the bill predicted the legislation would help save the Philadelphia-based company from Chapter 11 bankruptcy and its 1,000 Pennsylvania employees from unemployment.
The stock closed up 20 cents, or 12.1 percent, at $1.85 a share on the New York Stock Exchange on Wednesday.
``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,'' said House Majority Leader John Perzel, a Philadelphia Republican.
Crown, Cork & Seal, which faces mounting asbestos liabilities currently put at about $100 million a year, has seen asbestos concerns undermine its credit rating and drive up financing costs while it operations struggle beneath a $6 billion debt burden.
SHORT AND NOT SO SWEET
The packaging giant's woes stem from its brief ownership of Mundet Cork Corp., an insulation maker it bought in 1963 and sold after only three months.
Judges in other states have ruled that Crown Cork remains responsible for Mundet's liabilities even though it owned the company for only 90 days.
The legislation approved by the Pennsylvania General Assembly would limit asbestos liabilities acquired through a merger to the value of the acquired company at the time of the deal. A legislative aide said Mundet was worth about $7 million 38 years ago.
But opponents of the legislation predicted the bill would quickly meet with legal challenges, partly because Crown, Cork & Seal is its only known beneficiary.
Critics also maintain that the legislation may unfairly penalize Pennsylvania residents who suffer from asbestos-related diseases.
Investor concerns about mounting asbestos liabilities recently resurfaced on Wall Street after oilfield services giant Halliburton Co. (NYSE:HAL - news) was slapped with $30 million in damages related to the cancer-causing material.
A number of large U.S. companies including W.R. Grace & Co. (NYSE:GRA - news) and building materials maker USG Corp. (NYSE:USG - news) have been forced to file for bankruptcy while fears of liabilities have overshadowed a variety of stocks from forest produc Du Du FE have overshadowed a variety of stocks from forest produc Du Du FE |
