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EnPro shares rally after bankruptcy court ruling

Rochester Business Journal
January 13, 2014

Shares of EnPro Industries Inc. shot up Monday afternoon following a favorable ruling for the company in an asbestos litigation trial involving Palmyra-based Garlock Sealing Technologies LLC, its deconsolidated subsidiary.

EnPro stock (NYSE:NPO) was trading midday at $74.16 a share, up 25 percent from Friday’s close of $59.21.

Judge George Hodges of the U.S. Bankruptcy Court for the Western District of North Carolina Friday evening entered an order estimating the liability for present and future mesothelioma claims against Garlock at $125 million, consistent with the positions Garlock put forth at trial.

Hodges’ opinion follows the completion of an estimation trial held in his court during July and August. The judge’s estimate is for mesothelioma claims only. Additional amounts may be necessary to resolve other disease claims and for trust administration costs, the company reported.

In 2010, Garlock filed a voluntary petition to establish a trust to resolve all current and future asbestos claims under the U.S. Bankruptcy Code.

“The estimates of Garlock’s aggregate liability that are based on its historic settlement values are not reliable because those values are infected with the impropriety of some law firms and inflated by the cost of defense,” Hodges wrote in a 65-page ruling. “The best evidence of Garlock’s aggregate responsibility is the projection of its legal liability that takes into consideration causation, limited exposure and the contribution of exposures to other products.”

Stephen MacAdam, EnPro’s president and CEO, said during a Monday conference call to discuss the ruling that the decision was well-reasoned and well-written and would likely serve as an historic landmark in asbestos litigation.

He noted the decision would be incorporated into a plan of reorganization for Garlock. Company leaders did not know how long the process would take, only that it could be resolved in as little as one year or take up to a number of years.

Sterne Agee Group Inc. analyst Todd Vencil said in a note that the ruling was extremely favorable for EnPro.

“This amount is in line with (Garlock’s) own estimate of its liability, and indeed it is clear that the judge more or less accepted (Garlock’s) estimation process and assumptions, while explicitly rejecting the claimants,” Vencil wrote.

The opinion can be found under the investor relations tab on the EnPro Industries website www.enproindustries.com.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.
 






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