NEW YORK — Manville Corp. agreed today to inject up to $520 million over the next seven years into a trust fund designed to compensate victims of asbestos-related diseases to resolve a severe cash crunch.
Under a long-awaited financial restructuring, the common stock holdings of the Manville Personal Injury Settlement Trust will be increased to 80% from 50% to give the trust a larger chunk of Manville's assets.
The agreement is the first step toward ensuring payment of more than 130,000 pending and untold future claims by people who contracted lung cancer and other respiratory ailments inhaling fibers from Manville-made asbestos.
The restructuring was ordered by U.S. District Judge Jack B. Weinstein after the trust earlier this year ran out of cash to pay new claims, which it said would not be met until well into the 21st Century.
The trust was formed in 1988 as a legally separate body under Denver-based Manville's bankruptcy court reorganization. The company declared Chapter 11 in 1982 because it could not meet mounting asbestos liability claims.
The new payments by Manville will be made by the company as special distributions to all common stockholders. Parties involved in the restructuring said negotiations are continuing on a plan to overhaul the way the trust settles asbestos health claims.
Under the restructuring, Manville will turn the trust's convertible stock into common stock, giving the trust about 80% of the company's 120 million outstanding common shares.
The trust then would receive 80% of a maximum total of $650 million in special distributions to stockholders to be made over the next seven years, or $520 million.
The first $100-million payment would be made on Dec. 1 or after the final payment plan is approved by Weinstein. Another $100 million would be pumped into the trust one year later, with $40-million infusions in each of the next two years.
In the fourth through seventh years, the trust will receive an annual distribution based on Manville's performance up to a maximum $240 million.