RPM to Close $800M Book on Asbestos
The parent company of Rust-Oleum, Carboline and other leading coating brands will again be whole—and far more profitable—under a bankruptcy reorganization plan approved this week.
Two federal courts in Delaware have approved RPM International's reorganization plan for its Specialty Products Holding Corp. subsidiary, four and a half years after the longtime manufacturer of asbestos-containing products filed for bankruptcy protection.
The May 31, 2010, bankruptcy filing allowed SPHC to develop a plan to permanently resolve hundreds of millions of dollars in asbestos claims related to its Bondex International subsidiary.
At the time of the filing, RPM said the company had already paid out more than $600 million in asbestos claims over eight years.
Once a household name, Bondex manufactured a variety of asbestos-containing patch and repair products for decades. RPM acquired Bondex (its first acquisition) in 1966, and Bondex continued to produce asbestos-containing joint compound until 1977.
Since the bankruptcy filing, the SPHC subsidiaries' annual sales of more than $400 million have been split off from RPM's main financial statements—a significant omission for the $6.5 billion-a-year multinational.
Based in Medina, OH, RPM owns dozens of companies that produce leading industrial and consumer brands of specialty coatings, sealants and building materials.
The move will allow RPM to count and report more than $400 million in annual sales from SPHC and its subsidiaries, including Dryvit. Dryvit's EIFS were used to clad the Gordon E. Inman Center for health services (pictured) at Belmont University.
Its industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals under the Stonhard, Tremco, Dryvit, Carboline and other brands.
RPM's consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors.
In July, RPM announced that it would fund a $797.5 million trust fund to address all current and future asbestos claims. That move will permanently protect SPHC and its subsidiaries from future claims.
Closing the Loop
The last step in the process was to reunite SPHC and its subsidiaries with RPM International and its balance sheet—the transition paved this week by the U.S. Bankruptcy Court and U.S. District Court judges in Delaware.
Asbestos was commonly used in joint compounds and other construction materials for decades.
The SPHC subsidiaries are:
|RPM International Inc.|
The end of the Specialty Products Holding Corp. reorganization will bring more companies and brands "back into the RPM family," said chairman and CEO Frank C. Sullivan.
Closing of the reorganization plan, including establishment of the asbestos trust fund, will take several days, RPM reported Wednesday (Dec. 10).
After a disappointing first quarter, the change to the company's financial statements will be welcome, said Frank C. Sullivan, RPM chairman and CEO.
"We are pleased to bring finality to our legacy Bondex asbestos liability and welcome back into the RPM family an outstanding group of SPHC operating companies that are generating more than $400 million in sales on an annualized basis, along with strong operating income and cash flow," Sullivan said.