Companies File Bankruptcy to Resolve Asbestos Claims

June 2, 2010

Wilmington, DE Bondex International and Specialty Products Holding Corp (SPHC), two subsidiaries of the chemical company RPM International Inc., filed for bankruptcy on June 1, 2010, as RPM seeks to resolve thousands of asbestos-related lawsuits in the wake of an $11 million asbestos cancer verdict brought on behalf of Vernon Walker, a mesothelioma patient and career painter.



According to court documents, the jury in the asbestos suit awarded Mr. Walker and his wife approximately $11 million, allocating 40 percent of the blame to asbestos mining company Union Carbide Corporation, and the remaining liability to product manufacturers Kelly Moore, Georgia Pacific and Bondex. Most of the manufacturers settled before or during trial, while Bondex was the only remaining defendant at the time of the verdict in May 2010.



According to Reuters, Bondex and SPHC filed Chapter 11 proceedings. RPM and all of its operating subsidiaries are not part of the Chapter 11 filing and will not be affected by it. However, RPM also asked the bankruptcy court for an injunction to prevent it from becoming a target of plaintiffs who brought asbestos lawsuits against the bankrupt Bondex and SPHC. The two bankrupt subsidies plan on using Chapter 11 to establish a trust for the payment of asbestos-related claims. SPHC said it has put aside $40 million from Wells Fargo Capital Finance to fund its bankruptcy.



"This action has been taken to once and for all resolve the asbestos-related Bondex legacy liability. 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," said Frank Sullivan, RPM chairman and CEO.



Over the last 20 years, Bondex has been involved in many asbestos-related lawsuits, and its bankruptcy cases have been increasing since 2002. Around 2004, Bondex established a reserve of $140 million to cover known asbestos claims, as well as an additional amount of $51.2 million to cover future claims.



Most Bondex products containing asbestos were used in construction and sold before 1981. The company was cited in 1979 for failure to warn. Some of its asbestos-containing products include:

• Bondex All Purpose Joint Compound
• Bondex All Purpose Joint Cement
• Bondex Ready-Mixed Joint Cement
• Liquid Aluminum Coating
• Bontone Fibred Masonry Coating
• Dramex Ready Mixed Finish
• Stays White Mobile Home Roof Coating
• RPM International Inc. sales for 2007 year were $3.3 billion.

The company employs approximately 9,400 people at manufacturing plants in 16 countries. They reported a loss of $86.7 million for the quarter ending May 31, due to a $288.1 million pre-tax charge taken out to cover future asbestos costs.