ABB asbestos bid backfires.
'The third Circuit Court has issued a decision denying Combustion Engineering's request for a rehearing on the aspects of its original order,' ABB, which has a number of subsidiaries in the West Midlands, said in a statement yesterday. 'We regret, but expected this decision.'
Shares in ABB fell five per cent on the news, but later recouped some of the losses to stand down 3.1per cent.
'The uncertainty that hung over ABB before remains now. It is negative,' said Zuercher Kantonalbank analyst Mark Diethelm. 'It's all about how well ABB as a whole is going to be protected from this issue.'
In December, ABB had asked the court to review parts of the original deal to include its US divisions Lummus and Basic in the overall asbestos settlement plan for ABB's Combustion Engineering business.
'The claims against these companies are insignificant and we are working on a solution for these companies,' ABB said after its request was denied.
ABB's asbestos plan was aimed at capping potentially ruinous asbestos claims.
The surprise rejection of the original plan late last year was a major setback for ABB.
The maker of electric motors and robots had hoped the deal would end years of legal wrangling and put a cap on asbestos claims filed by thousands of former US workers.
The US court had criticised ABB's plans to include the two divisions in its plan for Combustion Engineering and ring-fence asbestos claims for all three subsidiaries.
The court's decision not to reconsider parts of the ruling dealt another blow to confidence in ABB's ability to resolve the asbestos liabilities quickly and without significant extra cost, as management has repeatedly pledged.
Combustion Engineering, which remains in Chapter 11 creditor protection, made industrial boilers lined with asbestos. Lummus and Basic have received far fewer asbestos claims than Combustion Engineering,