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Raytech Creates Asbestos Trust, Exits Bankruptcy
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Business New Haven
4/30/2001
By: BNH
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SHELTON - Raytech Corp. (NYSE: RAY), which makes energy absorption and power transmission products announced April 18 that it had emerged from bankruptcy with a plan that shields it from further asbestos-related personal-injury claims.
Under the terms of a settlement with creditors, the company is handing over 90 percent of its common stock to a special asbestos trust and state and federal governments. In exchange, it will eliminate its exposure to an estimated $6.76 billion in “allowed general unsecured claims, including asbestos-related personal injury allowed claims,'' according to LeGrande Young, Raytech's secretary and general counsel. Environmental allowed claims of $432 million will also be eliminated under the settlement, the company said.
Existing shareholders will see the value of their stake diluted as they retain their shares equivalent to ten percent of Raytech's common stock, Young said. All present and future asbestos-related personal injury claims are assumed and will be resolved by an independently administered claims trust, not by the company, Raytech said.
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