CHARLOTTE, N.C.--(BUSINESS WIRE)--EnPro Industries, Inc. (NYSE: NPO) today announced that on May 15, 2017
the U.S. Bankruptcy Court for the Western District of North Carolina
(the “Bankruptcy Court”) announced its decision recommending that the
U.S. District Court for the Western District of North Carolina (the
“District Court”) confirm the joint plan of reorganization (the “Joint
Plan”) of certain of EnPro’s subsidiaries, including Garlock Sealing
Technologies LLC (“GST LLC”), to resolve their current and future
asbestos claims. The Bankruptcy Court presides over the asbestos claims
resolution proceedings involving GST LLC and EnPro subsidiaries,
Garrison Litigation Management Group, Ltd. (Garrison”), The Anchor
Packing Company (together with GST LLC and Garrison, “GST”) and OldCo,
LLC (the successor by merger to Coltec Industries Inc (“Coltec”)). EnPro
anticipates that the Bankruptcy Court will soon enter its order
recommending confirmation of the Joint Plan. The Joint Plan implements
the terms of a comprehensive settlement reached in March 2016 and was
most recently described by EnPro in its Form 10-Q for the period ended
March 31, 2017 filed with the Securities and Exchange Commission on May
2, 2017.
Some technical amendments to the Joint Plan were made prior to the
commencement of the confirmation hearing to effect the consensual
resolution of certain objections to the Joint Plan that had been filed
with the Bankruptcy Court. Specifically, objections to the Joint Plan
had been filed by three insurers, by the purchaser of assets of the
Quincy Compressor business formerly operated by Coltec and by the
bankruptcy administrator. Of the five objections, four were withdrawn
and only one aspect of one objection, which had been filed by an
insurer, was not resolved prior to the confirmation hearing. The
Bankruptcy Court recommended that this remaining objection be overruled.
None of the amendments to the Joint Plan to resolve the objections
affected the amounts or timing of contributions to be made by EnPro or
any of its subsidiaries to the asbestos resolution trust to be
established by the Joint Plan.
The District Court has scheduled a hearing on June 12, 2017 to consider
the Bankruptcy Court’s recommendation. The District Court’s review will
be an independent review in which the District Court is not required to
give deference to the Bankruptcy Court’s findings or rulings. If
approved by the District Court, the Joint Plan may not be consummated
until at least 40 days after the date the District Court issues its
order confirming the Joint Plan.
The Bankruptcy Court also announced that it will recommend that the
District Court approve several settlements with insurance carriers that
issued policies covering losses associated with product liability claims
against Coltec and certain of its subsidiaries. First, with respect to
approximately $62 million of remaining available products hazard limits
and insurance receivables covering claims against both GST and OldCo
(the “Garlock Coverage Block”), the Bankruptcy Court announced that it
will recommend approval of settlements with two carriers that will pay
their full aggregate remaining policy limits of approximately $18.8
million over a three-year period following consummation of the Joint
Plan. A previously disclosed agreement with another group of carriers
calls for the payment of $24 million. EnPro expects that the full amount
of remaining policy limits and insurance receivables (approximately
$19.2 million) in the Garlock Coverage Block will be received either
through settlements or in reimbursement of GST’s plan funding as
payments are made by the asbestos trust.
In addition, the Bankruptcy Court announced that it will recommend that
the District Court approve settlements with two insurance carriers that
issued primary general liability policies prior to January 1, 1976 (the
“Pre-Garlock Coverage Block”) that permit the recovery of some of
OldCo’s $110 million of planned contributions to the asbestos trust
under the Joint Plan. The two carriers will make one-time cash payments
to OldCo in the aggregate amount of approximately $19.0 million within
30 days of consummation of the Joint Plan.
The insurance settlements are subject to a notice period and the
possibility of objections prior to the June 12 hearing.
“Today’s Bankruptcy Court decision is a very significant milestone in
our effort to permanently resolve our legacy asbestos burden and the
settlement of these insurance matters will help defray the costs of
resolving that burden,” said Steve Macadam, EnPro’s President and CEO.
“Assuming the District Court approves the Joint Plan and absent any
appeals, we expect that the Joint Plan would be consummated in the third
quarter of this year, resulting in the financial reconsolidation of
these subsidiaries with EnPro,” Mr. Macadam continued.
GST and OldCo, as entities currently under reorganization, are not
consolidated with EnPro and its other subsidiaries for financial
reporting purposes and are accounted for on a cost basis in the
consolidated financial statements of EnPro. As a result, the above
described recoveries by OldCo relating to the Pre-Garlock Coverage Block
will not impact the consolidated financial results of EnPro for the
quarter ending June 30, 2017. Pursuant to applicable accounting rules,
upon and as of the date of consummation of the Joint Plan, the assets
and liabilities of both GST and OldCo would be reconsolidated into the
EnPro balance sheet at their estimated fair value, and a pre-tax gain
would be recognized for the excess of the estimated fair value of the
GST and OldCo businesses over the net book value of EnPro’s investment.
In addition, beginning on the date of consummation, EnPro’s consolidated
financial statements would include the sales, income, expenses and cash
flows of both GST and OldCo.
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 the District Court, uncertainties related to the
resolution of overruled objections to the Joint Plan, including any
delay in the effectiveness of the Joint Plan as a result of any appeal
and any changes to the Joint Plan implemented in the resolutions of such
objections, risks and uncertainties as a result of any unanticipated
delays in the consummation of the Joint Plan if approved by the District
Court, 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, and
risks and uncertainties related to the estimation of the amount and
timing of future insurance recoveries. EnPro’s filings with the
Securities and Exchange Commission, including the Form 10-K for the year
ended December 31, 2016, describe other risks and uncertainties. Except
as may be required by law or as expressly undertaken in this press
release, 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.
