Source: http://www.bdlive.co.za, July 18, 2016
By: Jack Kaskey and Tiffany Kary
Dupont and Dow Chemical must tell shareholders before next week’s merger vote that they may face exposure to costly potential damages from claims that a chemical used to make Teflon caused cancer and other ailments, community activists told the companies.
While DuPont is the named target of the 3,500 lawsuits filed by people living near a Teflon plant in Parkersburg, West Virginia, it has claimed Chemours, a spinoff it created last year, was required to pay any damages. Chemours said last week it might fight efforts to force payment, saying it “retains legal defences” to DuPont’s claims of indemnification.
DuPont and Dow should tell shareholders before the July 20 vote on the $59bn merger that the combined firms could end up getting stuck with the bill, Action Fund Network and Keep Your Promises DuPont wrote.
The merger partners must also share updated federal guidance on how much of the Teflon chemical people can safely be exposed to and the potential liability at 19 polluted sites, the activists wrote in a letter published in DuPont regulatory filing on Friday. The undisclosed items “are substantial, material liabilities that DuPont faces as a result of its decades-long contamination caused by perfluorooctanoic acid (PFOA), which Dow shareholders stand to inherit,” the groups said.
DuPont said in the filing that it had disclosed all the information necessary under federal law. The Wilmington, Delaware-based company remains “committed to fulfilling all our legal and environmental obligations as it relates to PFOA,” spokesman Dan Turner said.
Representatives of Dow and Chemours did not respond to requests for comment.
Potential payments related to health claims from exposure to the Teflon chemical could reach $1.9bn, according to Bloomberg Intelligence. DuPontlast week was ordered by an Ohio jury to pay more than $5.5m to a man who developed testicular cancer after drinking water polluted with PFOA. It was the sixth case to be resolved, with 40 more scheduled for next year.
It makes sense that Chemours would try to break the indemnification clause in last year’s separation agreement as the potential liability is the biggest drag on the stock price, said Christopher Perrella, an analyst at Bloomberg Intelligence. While shares rose earlier this year, they are down 57% since debuting in June 2015.
“It may be hard for Chemours to get out from under it unless they go bankrupt,” Perrella said.