Halliburton subsidiary DII Industries reaches agreement on asbestos settlement

By Carlise Newman

Chicago, Nov. 6 - Halliburton said DII Industries LLC has reached an agreement to limit its cash required for its asbestos settlements to $2.775 billion. DII also will extend its voting deadline for its reorganization plan past Nov. 19, as previously announced.

The agreement is conditioned upon a Chapter 11 filing by Dec. 31.

The company and the representatives of claimants have agreed that if to cap the total cash payments under the settlement agreements at $2.775 billion after completion of medical due diligence for current claims.

Halliburton has also agreed that two-thirds of $486 million, or $326 million, of the $2.775 billion cash amount will be paid on the earlier of 5 days prior to the anticipated Chapter 11 filing by the affected Halliburton subsidiaries and Dec. 31, as long as product identification due diligence information on those claims has been provided.

The terms of the settlement still must be approved by 75% of known present asbestos claimants.

The deadline for submission of acceptances will be extended to allow time for receipt and review of the disclosure statement supplement.

Halliburton also said it has concluded negotiations with several banks and non-bank lenders on the terms of multiple credit facilities relating to the funding of the settlement. There are a number of conditions that must be met before the facilities will be available for use, one of which is the Chapter 11 filing for DII Industries, Kellogg Brown & Root and some of their subsidiaries.

The credit facilities consist of a $700 million 3-year revolving credit facility for working

capital purposes; a master letter of credit facility intended to ensure that existing letters of credit supporting the company's contracts remain in place during the filing; and a $1 billion delayed-draw term facility to be available for cash funding of the trust for the benefit of claimants.

The delayed-draw term facility is intended to eliminate uncertainty in the capital markets concerning the company's ability to meet its funding requirement, once final court confirmation of a reorganization plan has been obtained.

Remaining conditions to the Chapter 11 filing include availability of the financing arrangements, approval of the reorganization plan by required creditors, including at least 75% of asbestos claimants, and Halliburton board approval.

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