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Anadarko Petroleum
Corporation
today announced that it has entered into an
agreement with the plaintiffs (the "Litigation Trust") in the Tronox
Adversary Proceeding to resolve all claims against Kerr-McGee
Corporation and certain of its subsidiaries and affiliates
(collectively "Kerr-McGee"), which stemmed from alleged actions by
Kerr-McGee prior to its acquisition by Anadarko in 2006. Kerr-McGee
is now a wholly owned subsidiary of Anadarko.
"This settlement agreement with the Litigation Trust and the U.S.
Government eliminates the uncertainty this dispute has created, and
the proceeds will fund the remediation and cleanup of the legacy
environmental liabilities and tort claims," said Anadarko Chairman,
President and CEO Al Walker. "Investor focus can now return to the
tremendous value embedded in Anadarko's asset base, allowing our
peer-leading operational and exploration results to again become the
basis for valuation. We are grateful to our stakeholders who have
maintained their confidence and trust in our people and our assets."
In exchange for a complete release of all claims asserted against
Kerr-McGee, Anadarko has agreed to pay a total of $5.15 billion to
the plaintiffs, which represents a principal sum of approximately
$3.98 billion and 6-percent interest thereon from the filing of the
complaint in May 2009. Under the terms of the settlement agreement,
the Litigation Trust and Kerr-McGee have agreed to mutually release
claims against each other, and the U.S. Government and Kerr-McGee
have provided mutual covenants not to sue. The U.S. Government also
will provide contribution protection from third-party claims seeking
reimbursement from Kerr-McGee at more than 4,000 sites covered by the
covenants.
The settlement agreement is subject to recommendation by the U.S.
Bankruptcy Court and approval of the U.S. District Court, both in the
Southern District of New York, and the issuance of an injunction
barring similar claims from being asserted by third parties.
"As we highlighted during our recent investor conference, Anadarko's
employees have continued to deliver remarkable results that have not
been fully recognized by the equity markets due to the potential
implications of this case. Together with our efficient allocation of
capital and active portfolio management, the company's
industry-leading exploration success and strong, transparent, and
sustainable growth metrics uniquely position Anadarko amongst its
peers. We look forward to having our exceptional results become the
foundation for even greater operating and share-price performance
through the balance of this decade and beyond," added Walker.
The Company expects the Tronox Adversary Proceeding to be stayed
pending final approval of the settlement agreement. The settlement
payment is to be made after the District Court's approval of the
settlement agreement and issuance of the injunction are final and
non-appealable. The claims asserted in the Tronox Adversary
Proceeding will be dismissed with prejudice after the settlement
payment is made. This process is currently expected to be completed
prior to the end of the third quarter of 2014. The Company's
significant cash position and available $5 billion credit facility
provide flexibility in funding the settlement payment.
The Company expects the impact of the settlement agreement to be
reflected in its first-quarter 2014 financial statements. The Company
estimates it will record a gross tax benefit of approximately $1.65
billion associated with the settlement, offset by approximately $1.10
billion in uncertain tax positions, currently resulting in a net tax
benefit of approximately $550 million.
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