Honeywell Announces Court Approval of NARCO Trust Buyout and Planned Acquisition of HarbisonWalker by Platinum Equity

Rhea-AI Summary

Honeywell (NASDAQ: HON) received court approval for its buyout agreement with the North American Refractories Asbestos Personal Injury Settlement Trust, freeing it from future funding obligations. The one-time payment of $1.325 billion was approved by the U.S. Bankruptcy Court on December 8, 2022. This move allows Honeywell to reduce its NARCO reserve from $695 million and offset liabilities with proceeds expected from HarbisonWalker International Holdings' sale to Platinum Equity, estimated at $300 million. Honeywell continues to retain rights to collect insurance proceeds related to asbestos claims.

Positive

• Elimination of funding obligations to the Trust, reducing future liabilities.
• Anticipated proceeds from HarbisonWalker sale expected to offset the buyout cost by $300 million.
• Reduction of NARCO reserve from $695 million to expected claims-related amounts.

Negative

• One-time payment of $1.325 billion may strain cash flow despite offsetting proceeds.
• Integrating the financial impacts of the buyout and insurance collections could pose challenges.

CHARLOTTE, N.C., Dec. 14, 2022 /PRNewswire/ -- Honeywell (NASDAQ: HON) has announced court approval of its buyout agreement with the North American Refractories Asbestos Personal Injury Settlement Trust (the "Trust"), which provides for the elimination of Honeywell's funding obligations to the Trust. Under the agreement and as previously announced, Honeywell will make a one-time, lump sum payment in the amount of $1.325 billion ("Buyout Amount") to the Trust, subject to certain deductions permitted under the buyout agreement. The buyout agreement was approved on December 8, 2022 by the United States Bankruptcy Court for the Western District of Pennsylvania. Upon the closing of the transactions in the buyout agreement, Honeywell will be released from its funding obligations to the Trust. With court approval of the buyout agreement, Honeywell will reduce the NARCO reserve ($695 million as of September 30, 2022) to its estimate of claims-related amounts to be paid to the Trust through closing and will also recognize a charge associated with the Buyout Amount and a related balance sheet impact in the fourth quarter of 2022.

Further, HarbisonWalker International Holdings, Inc. ("HWI"), the reorganized and renamed entity that emerged from the NARCO bankruptcy, has entered into a definitive agreement today for private equity firm Platinum Equity to acquire HWI. The anticipated net proceeds to Honeywell from this transaction as determined pursuant to the buyout agreement will serve to offset the fourth quarter financial statement impacts of the Buyout Amount by approximately $300 million. Honeywell will also continue to have the right to collect insurance proceeds in connection with the Trust's asbestos-related insurance policies, which will also serve to offset the cash impacts of the Buyout Amount and will accordingly continue recognizing such receivables.

All disclosed information on Honeywell's relationship with the Trust and HWI is available in our most recent 10-Q Q3 2022 10-Q Footnote #14- Commitments and Contingencies- Asbestos Matters and in our Current Reports on Form 8-K filed with the Securities and Exchange Commission on November 18, 2022 (as amended by a Form 8-K/A filed on November 18, 2022) and November 21, 2022.

Honeywell (www.honeywell.com) delivers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.

This document contains certain statements that may be deemed "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes, or anticipates will or may occur in the future. They are based on management's assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors. They are not guarantees of future performance, and actual results, developments, and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to risks and uncertainties that can affect our performance in both the near- and long-term, including with respect to the closing of the HWI sale given its relationship to the above described fourth quarter of 2022 financial statement impacts. In addition, no assurance can be given that any plan, initiative, projection, goal commitment, expectation, or prospect set forth in this statement can or will be achieved. Any forward-looking plans described herein are not final and may be modified or abandoned. We identify the principal risks and uncertainties that affect our performance in our Form 10-K, Form 10-Qs, and other filings with the Securities and Exchange Commission.

Contacts:
Media	Investor Relations
Caitlin Leopold	Sean Meakim
(980) 287-5730	(704) 627-6200
caitlin.leopold@honeywell.com	sean.meakim@honeywell.com

 

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SOURCE Honeywell

FAQ

What is the significance of the Honeywell buyout of the NARCO Trust?

The buyout eliminates Honeywell's future funding obligations, potentially improving financial flexibility.

How much did Honeywell agree to pay for the buyout?

Honeywell agreed to a one-time payment of $1.325 billion to the Trust.

When was the buyout agreement approved?

The buyout agreement was approved by the court on December 8, 2022.

What future financial impacts does Honeywell expect from the buyout?

Honeywell expects to offset the buyout cost by approximately $300 million from the sale of HarbisonWalker.

What are the implications of the NARCO Trust buyout for Honeywell shareholders?

The buyout could enhance shareholder value by reducing liabilities and improving the company's cash position.