Coatings major PPG Industries (PPG) said that the U.S. Bankruptcy Court for the Western District of Pennsylvania has confirmed the reorganization plan for Pittsburgh Corning.
Pittsburgh Corning is a joint venture between PPG Industries and Corning Inc. (GLW) with both holding equal stakes in the entity. Pittsburgh Corning is a leading maker of cellular glass insulation for a range of residential, commercial and industrial applications.
The bankruptcy court has issued a revised opinion and final order confirming the reorganization plan. Earlier, it issued an opinion and interim order for the plan on May 16.
Pittsburgh Corning, in April 2000, filed Chapter 11 bankruptcy protection from liabilities following the filing of numerous lawsuits against it, alleging personal injury from exposure to asbestos.
Under the current reorganization plan, all current and future claims against PPG Industries associated with the exposure to asbestos-containing products made, distributed or sold by Pittsburgh Corning will be directed to a trust for resolution. Moreover, PPG Industries and its participating insurers should make contributions to the trust.
Under the plan, PPG Industries will pay roughly $825 million in cash to the trust according to a fixed payment schedule over a ten-year period. It will also give around 1.4 million shares or cash equivalent and surrender its stakes in Pittsburgh Corning and Pittsburgh Corning Europe. Moreover, the company’s insurers will pay roughly $1.7 billion in cash to the trust through 2027.
As a result of the settlement arrangement, PPG Industries will emerge clear of all future asbestos-related injury claims pertaining to Pittsburgh Corning.
PPG Industries has a diversified business, both in terms of products offered and geographical presence. It has a leading position in several paints and coatings end markets.
PPG Industries is seeing healthy momentum across North America and Asia. It is pursuing restructuring of its European operation, which is expected to fetch meaningful cost savings this year. However, the European market is expected to remain under pressure and raw material inflation and currency headwinds remain concerns for the company.
PPG Industries currently carries a Zacks Rank #3 (Hold).
Other companies in the chemical space with favorable Zacks Rank include Methanex Corporation (MEOH) and Celanese Corporation (CE). Both retain a Zacks Rank #1 (Strong Buy).
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