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May 21, 2018

Elmwood Park's Sealed Air pays $930 million in cash to asbestos trust

Sealed Air Corp., the Elmwood Park maker of Bubble Wrap, has paid $930 million in cash into a trust for asbestos victims, the company said Tuesday. The payment settles a claim that arose after Sealed Air bought a business from W.R. Grace & Co., which filed for bankruptcy after facing millions of dollars in asbestos claims.

W.R. Grace emerged from bankruptcy Monday, after almost 13 years, which cleared the way for Sealed Air to pay the settlement.

“This is very positive news for Sealed Air, as the completion of the settlement has been anticipated for some time and now brings finality to a matter after more than a decade of preparation,” said Jerome A. Peribere, CEO of Sealed Air. “We will no longer incur interest on the settlement, which amounted to $48 million in 2013. Additionally, we anticipate meaningful cash tax benefits over the next several years.”

In addition to the $930 million in cash, the company also paid 18 million shares of Sealed Air common stock, with a value of more than $540 million, based on Tuesday’s share value.

The claims against Sealed Air grew out of its $4.3 billion purchase of Cryovac, a flexible packaging business, from W.R. Grace in 1998. Some plaintiffs accused W.R. Grace of fraudulently transferring assets to Sealed Air “to the detriment of creditors holding asbestos claims against Grace.”

Sealed Air agreed in 2002 to pay $512 million to settle the claims, but that agreement was held up by litigation over the W.R. Grace bankruptcy, which dragged on for almost 13 years, in what is believed to be the longest bankruptcy in U.S. history.

Sealed Air’s payment grew to $930 million because of interest. The total value of the W.R. Grace-related asbestos trusts, which will be used to pay people injured by asbestos, is almost $4 billion.

In a research note, analysts Ghansham Panjabi and Mehul Dalia of R.W. Baird said the resolution of the W.R. Grace agreement is worth about $2 a share to Sealed Air, because Sealed Air will no longer face interest costs on the settlement, and it will be able to take a tax deduction for the settlement amount.

The analysts called the event “a modest positive” for Sealed Air shares.

W.R. Grace, a Columbia, Md.-based chemical and materials manufacturer that was founded in 1854, was hit hard by asbestos injury litigation.

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Elmwood Park's Sealed Air pays $930 million in cash to asbestos trust

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