W.R. Grace Sees Profits Jump

The company hopes its Joint Plan of Reorganization to emerge from a decade in bankruptcy will be approved soon, and that its total asbestos-related liability will be $1.7 billion or less.

W.R. Grace & Co. is doing very well for a company that has yet to emerge from a Chapter 11 bankruptcy filed a decade ago because asbestos-related personal injury and property damage claims were soaring. The Columbia, Md., specialty chemicals and materials company announced July 26 that its sales in this year’s second quarter were $826.4 million, a 20 percent improvement from a year earlier, and net income rose by 48.6 percent to $75.8 million quarter-over-quarter.

Grace raised its 2011 estimate, saying as of July 26, it expects 2011 sales to be $3.25 to $3.30 billion. It previously expected $2.85 to $2.95 billion.

The April 2, 2001, bankruptcy involved Grace and 61 U.S. subsidiaries and affiliates. There has been progress this year at bringing the company out of bankruptcy; a bankruptcy court in Delaware issued an order in January 2011 confirming Grace's Joint Plan of Reorganization, and a U.S. District Court heard oral arguments June 28-29 as it considers whether to affirm the plan. According to Grace, the plan states how all pre-petition claims and demands against Grace will be resolved.

When the Chapter 11 case commenced, 129,191 personal injury claims were pending against Grace, according to its March 2011 SEC quarterly filing. This filing says the total recorded asbestos-related liability as of March 31, 2011, was $1.7 billion. The filing says settling all claims might cost less if the bankruptcy court agrees with its position on the pending claims, but claimants maintain that the asbestos-related liabilities "are substantially higher than $1,700.0 million, and in fact are in excess of Grace’s business value."

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