McDermott International Inc. said it has reached a settlement agreement dealing with asbestos claims against its Babcock & Wilcox Co. unit, which has been operating under Chapter 11 bankruptcy protection. Under the plan, announced Dec. 19, McDermott will put all of its equity in Babcock & Wilcox in a trust from which asbestos claims would be paid. The plan was filed in the federal Bankruptcy Court for the Eastern District of Louisiana.
New Orleans-based McDermott plans to issue 4.75 million shares of restricted common stock to the trust and iin effect guarantee that the stock's value would be $19 per share. The company also would issue $92 million in promissory notes to the trust.
The settlement agreement still requires approval by McDermott's stockholders and the asbestos claimants as well as confirmation by the bankruptcy court.
Babcock & Wilcox, which McDermott acquired in 1978, filed for Chapter 11 protection in February 2000 to resolve asbestos-related claims. From 1982 to the end of 1999, B&W had settled more than 340,000 asbestos claims at a cost of $1.6 billion, including payments to claimants and legal costs.