CHARLOTTE, N.C.--(BUSINESS WIRE)--EnPro Industries, Inc. (NYSE: NPO) today reported that, as contemplated
by the joint plan of reorganization to resolve all current and future
asbestos claims against its subsidiaries Garlock Sealing Technologies
LLC (“GST”) and Coltec Industries Inc (“Coltec”) that was filed in GST’s
asbestos claims resolution process (the “ACRP”) under Chapter 11 of the
Bankruptcy Code pending in the U.S. Bankruptcy Court for the Western
District of North Carolina (the “Bankruptcy Court”), the anticipated
corporate restructuring of EnPro’s Coltec subsidiary has been completed.
As planned, Coltec merged with and into a new indirect subsidiary of
EnPro, OldCo, LLC (“OldCo”), and OldCo, as the successor to Coltec,
filed a pre-packaged Chapter 11 bankruptcy petition with the Bankruptcy
Court on January 30, 2017. OldCo and GST have filed a motion with the
Bankruptcy Court for OldCo’s Chapter 11 proceedings to be administered
jointly with GST’s pending Chapter 11 proceedings.
The joint plan of reorganization was proposed pursuant to a
comprehensive settlement, announced on March 17, 2016, with the
court-appointed committee representing current asbestos claimants and
the court-appointed legal representative of future asbestos claimants in
the ACRP, as well as with ad-hoc representatives for current and future
asbestos claimants against Coltec. The joint plan remains subject to
approval by the Bankruptcy Court and the U.S. District Court for the
Western District of North Carolina (the “District Court”) and, if so
approved and consummated, would permanently resolve all current and
future asbestos claims against GST and Coltec/OldCo and would protect
all of EnPro and its subsidiaries from those claims, under Section
524(g) of the U.S. Bankruptcy Code.
Under the joint plan, the corporate restructuring of Coltec to
facilitate the implementation of the settlement was contingent upon the
approval of the joint plan by asbestos claimants. The vote of the
asbestos claimants approving the joint plan was certified on December
16, 2016, and the corporate restructuring was completed on December 31,
2016. Prior to this corporate restructuring, all operating businesses of
EnPro were operated either directly by Coltec or by direct or indirect
subsidiaries of Coltec. In the restructuring, all of Coltec’s
significant operating assets and subsidiaries were distributed to a new
direct, wholly owned subsidiary of EnPro, EnPro Holdings, Inc. (“EnPro
Holdings”). EnPro Holdings assumed substantially all of Coltec’s
non-asbestos liabilities. As part of the corporate restructuring, Coltec
merged with and into OldCo, which is a newly formed direct subsidiary of
EnPro Holdings. OldCo, as the restructured entity and the successor to
Coltec, retained responsibility for all asbestos claims and rights to
certain insurance assets of Coltec. It also retained ownership of the
business operated by its EnPro Learning System, LLC subsidiary (“EnPro
Learning System”), which provides occupational safety training and
consulting services offered to third parties; EnPro Learning System had
2016 revenues of approximately $364,000.
In connection with the restructuring, EnPro Holdings entered into a keep
well agreement with OldCo. Under the keep well agreement, EnPro Holdings
has agreed to make equity contributions to OldCo sufficient, together
with other funds available to OldCo, to permit OldCo to pay and
discharge its liabilities as they become due and payable. Prior to the
commencement of OldCo’s Chapter 11 proceedings, OldCo was released from
its obligations with respect to all outstanding indebtedness for
borrowings or evidenced by notes or similar instruments, including its
obligations with respect to the outstanding intercompany notes to GST
(which obligations were assumed by EnPro Holdings and which intercompany
notes were amended to extend their maturity date to January 1, 2018).
OldCo was also released as a guarantor under EnPro’s $300 million senior
secured revolving credit facility and under the indenture governing
EnPro’s 5.875% senior notes due 2022 (OldCo having been designated as an
“unrestricted subsidiary” under the terms of such indenture).
During the pendency of OldCo’s Chapter 11 proceedings, certain actions
proposed to be taken by OldCo not in the ordinary course of business
will be subject to approval by the Bankruptcy Court. As a result, during
the pendency of the OldCo’s Chapter 11 proceedings, EnPro will not have
exclusive control over OldCo, and, as required by GAAP, OldCo will be
deconsolidated from EnPro’s consolidated financial statements beginning
on January 30, 2017. EnPro does not anticipate recognizing any material
gain or loss in connection with such deconsolidation of OldCo.
Steve Macadam, EnPro’s President and Chief Executive Officer, said,
“Completing the corporate restructuring of Coltec and the commencement
of OldCo’s prepackaged Chapter 11 petition moves us two steps closer to
permanent resolution of these asbestos claims. While a number of steps
still remain, we continue to anticipate receiving all necessary court
approvals for confirmation of the joint plan, with the target that GST
and OldCo will consummate the joint plan and emerge from bankruptcy
during the third quarter of 2017.”
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 Bankruptcy Court or the District Court,
uncertainties related to pending and potential future objections to the
joint plan, including with any changes to the joint plan implemented in
the resolutions of such objections, the actions and decisions of
creditors, insurers and other third parties that have an interest in the
bankruptcy proceedings, the terms and conditions of any reorganization
plan that is ultimately approved by the Bankruptcy Court, including any
changes to the joint plan implemented in the resolutions of objections,
delays in the confirmation or consummation of the joint plan, risks with
respect to the timing of the completion of the restructuring, and 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.
EnPro’s filings with the Securities and Exchange Commission, including
the Form 10-K for the year ended December 31, 2015 and Form 10-Q for the
period ended March 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.
