|
Halliburton claims delayed
|
 |
February 15, 2002: 11:58 a.m. ET
Asbestos claims against oil services unit stayed by bankruptcy court.
|
NEW YORK (CNN/Money) - Halliburton Co. shares were up sharply in morning trading Friday after a U.S. Bankruptcy Court issued a temporary restraining order staying more than 200,000 pending asbestos claims against the oilfield services firm's Dresser Industries Inc. unit.
The ruling came Thursday in connection with the filing of a voluntary Chapter 11 filing by Harbison-Walker Refractories Co.
Harbison-Walker, which faces a large number of asbestos-related claims, said it planned to reorganize its finances in Chapter 11 with the help of a trust responsible for resolving all pending and future asbestos-related claims asserted against it.
The stay is temporary until the bankruptcy court holds a hearing, which is expected during the next two weeks.
Shares of Halliburton (HAL: up $2.03 to $16.69, Research, Estimates) were up more than 12 percent to $16.45 at midday.
The stayed claims represent a majority of the pending asbestos claims against all Halliburton units, the company said, and about 132,000 of the stayed claims are refractory claims that Harbison-Walker agreed to be responsible for when it was spun off from Dresser in 1992.
In its filing, Harbison-Walker said its parent, RHI Refractories Holding Co, and Dresser have agreed to work together and confirmed a reorganization plan to provide for distributions to the asbestos claimants.
If such a plan is approved, all pending and future Harbison-Walker-related lawsuits against the debtor and Dresser Industries would be channeled to a special trust for resolution and payment, the company said.
Trust to handle asbestos claims
The bankruptcy code allows the creation of this type of trust, as long as 75 percent of asbestos plaintiffs approve its creation.
CIBC analyst Allen Brooks said the stay was the first positive development regarding concerns about Halliburton's asbestos liabilities and indicates that the court will consider the company's plan to defer all asbestos claims regarding Harbison-Walker to a trust.
If it were successful, the strategy would effectively protect Halliburton from liabilities, but the plan still has to be approved by the court and it would have to get a 75 percent approval from plaintiffs, so there are still significant hurdles left, Brooks said.
He added that even if the case were fully resolved, the company still would have 70,000 pending asbestos claims against it and would have to be very successful at settling those for about $200 each after insurance.
The bankruptcy court also will be asked to approve $35 million in debtor-in-protection financing by Dresser Industries to Harbison-Walker so that Harbison-Walker can operate during the Chapter 11 proceeding and emerge from bankruptcy.
Dresser agreed to pay $40 million to RHI to facilitate the Chapter 11 filing, the company said. Dresser will pay RHI an additional $35 million if an acceptable plan of reorganization is filed with the bankruptcy court and another $85 million if an acceptable plan and trust are ultimately approved and confirmed by the court.
In 1992, Dresser Industries spun off its Harbison-Walker operations and certain other operations to shareholders in the form of stock in Indresco Inc. As part of that spinoff, Indresco -- which is now known as Harbison-Walker -- assumed responsibility for all of the asbestos-related claims associated with the Harbison-Walker business filed after the spinoff, Halliburton said.
Harbison-Walker also agreed to indemnify Dresser Industries against all costs associated with post-spinoff claims.
Halliburton, which until August 2000 was led by U.S. Vice President Dick Cheney, has been stung by $150 million of asbestos-related damages awarded in recent months. Asbestos once was widely used as a fireproofing and insulation material and in some cement products, but scientists concluded that inhalation of asbestos fibers could cause diseases, including lung cancer. 
-- from staff and wire reports
|
|
|
|
|
|
|
