- Two non-operating subsidiaries housing all Bondex asbestos liabilities initiate reorganization proceedings
- Immediately halts asbestos liability payments
- RPM's consolidated cash flow expected to improve by approximately $50 million annually
- RPM and all of its operating business units are not part of the reorganization and are unaffected by it
MEDINA, Ohio, May 31, 2010 /PRNewswire via COMTEX/ --RPM International Inc. (NYSE: RPM) announced today that action is being taken to permanently resolve current and future asbestos claims associated with Bondex International, Inc. (Bondex). In order to initiate this process, two non-operating subsidiaries, Bondex and Specialty Products Holding Corp. (SPHC), have filed Chapter 11 reorganization proceedings in Delaware. RPM and all of its operating subsidiaries are not part of the Chapter 11 filing and will not be affected by it.
SPHC is the holding company for Bondex. It also serves as the holding company for various operating companies that are not part of the reorganization filing. The SPHC operating companies include Chemical Specialties Manufacturing Corp.; Day-Glo Color Corp.; Dryvit Systems, Inc.; Guardian Protective Products, Inc.; Kop-Coat, Inc.; RPM Wood Finishes Group, Inc.; and TCI, Inc. All of these SPHC non-filing operating companies will continue to operate as usual and without interruption.
With fiscal 2009 revenues of $329 million and $19 million of pre-tax income, SPHC and its subsidiaries represented less than 10% of RPM's consolidated revenues and less than 11% of its consolidated pre-tax income for fiscal 2009.
The filings will stay all litigation related to the asbestos personal injury lawsuits against Bondex and SPHC. As a result, RPM anticipates that its annual consolidated cash flow will improve by approximately $50 million.
The Chapter 11 proceedings will enable SPHC and Bondex to establish a section 524(g) trust accompanied by a court order that will direct all future Bondex-related claims to the trust, which will then compensate only meritorious claims at appropriate values. Because the Bondex asbestos liability is confined to two subsidiaries, asbestos recoveries will be limited to some portion of the value of the affected entities.
SPHC has secured a commitment for $40 million in new "debtor-in-possession" financing from a lender group led by Wells Fargo Capital Finance LLC. This financing will provide SPHC with the financial resources to fund the costs of the Chapter 11 proceeding.
As a result of the filing, the financial results of SPHC and its subsidiaries will not be consolidated with those of RPM and its other subsidiaries. During the period of reorganization, beginning on May 31, 2010, SPHC and its subsidiaries will be presented in RPM's financial statements as an investment using the cost method. Since the asbestos liabilities reside with Bondex, its asbestos liability reserves will no longer be reflected on RPM's consolidated financial statements as of May 31, 2010.
"This action has been taken to once and for all resolve the asbestos-related Bondex legacy liability," stated Frank C. Sullivan, RPM's chairman and chief executive officer. "These filings bring an immediate halt to all tort system costs associated with the Bondex asbestos liabilities, and enable the filing entities to utilize section 524(g) and other provisions of the U.S. Bankruptcy Code to achieve a permanent and comprehensive resolution of asbestos-related liability. Initiation of this action will allow RPM to grow from a June 1, 2010 pro forma revenue base of approximately $3.1 billion no longer impacted by Bondex asbestos liability claims or related cash costs," Mr. Sullivan added.
Webcast and Conference Call Information
Management will host a conference call to further discuss this announcement beginning at 9:00 a.m. EDT on Tuesday, June 1, 2010. The call can be accessed by dialing 866-730-5762 or 857-350-1586 for international callers. It will also be webcast live, complete with slides, via the RPM website at www.rpminc.com.
Participants should access the conference approximately 10 minutes before the start time in order to complete the registration process. The conference, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions and must do so via phone. The media and all other participants will be in a listen-only mode.
For those unable to listen to the live call, a replay will be available from approximately noon EDT on June 1, 2010 until 11:59 p.m. EDT on June 8, 2010. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 11767279. The call will also be available for replay and as a written transcript at www.rpminc.com.
RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement, boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details are available at www.rpminc.com.
For more information, contact Robert L. Matejka, senior vice president and chief financial officer, at 330-273-8845 or firstname.lastname@example.org.
Media Contact: Kathie Rogers
Manager of Investor Relations
This press release contains "forward-looking statements" relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves, including for asbestos-related claims and warranty obligations; and (j) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2009, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.
SOURCE RPM International Inc.