Bubble Wrap maker Sealed Air Corp. settled a claim that stems from the company’s purchase of Cryovac, a flexible-packaging business, from Maryland-based specialty-chemical firm W.R. Grace & Co. in 1998. W. R. Grace recently emerged from more than twelve years of bankruptcy protection. The company entered Chapter 11 after accruing thousands of personal-injury lawsuits from claims of work-related asbestos exposure.
Sealed Air’s $930 million cash settlement could not be paid until Grace emerged, which left Sealed Air waiting to put the matter to rest. All of the trusts Grace has set up total almost $4 billion. There were also 18 million shares of Sealed Air paid out — worth approximately $540 million, based on the share value on February 4. Jerome A. Peribere, CEO of Sealed Air, pointed out that the company will no longer incur interest on the settlement, which amounted to a costly $48 million in 2013. “This is very positive news for Sealed Air,” he said. “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.”
In fact, with the stock rising 38 cents to $30.41 per share on February 4, analysts estimate that the resolution of the claim will be worth approximately $2 per share, due to the capital saved on interest and the forthcoming tax deduction for the settlement.
Asbestos exposure is the leading cause of mesothelioma — a lethal type of lung cancer that is the result of inhaling hazardous fibers. Numerous companies face legal troubles similar to those of W. R. Grace and Sealed Air; widespread asbestos use was not banned until the 1970s, and most victims who contract the disease do not know for decades because of a lengthy latency period. Each year, there are approximately 3,000 new cases of mesothelioma.