Halliburton's DII subsidiary files for bankruptcy protection to resolve asbestos, silica liabilities

By Carlise Newman

Chicago, Dec. 16 - Halliburton said that subsidiaries DII Industries LLC, Kellogg Brown & Root and other affected subsidiaries filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Pennsylvania as part of its plan to resolve its asbestos and silica liabilities.

In connection with reaching an agreement with representatives of asbestos and silica claimants to limit the cash required to settle pending claims to $2.775 billion, DII Industries agreed to pay $326 million of the $2.775 billion cash amount prior to the chapter 11 filing.

As a result of the chapter 11 proceedings, Halliburton will increase its accrual for current and future asbestos and silica claims to reflect the full amount of the proposed settlement, which will result in a pretax charge of $1 billion in the fourth quarter of 2003. The after-tax effect of the charge on diluted earnings per share is $2.29.

Halliburton said the balloting agent for the plan of reorganization told it that valid votes were received from over 386,000 asbestos claimants and over 21,000 silica claimants, representing all known claimants and meeting the voting requirements. Of the votes validly cast, over 98% of asbestos claimants and over 99% of silica claimants accepted the plan.

Halliburton also announced that the pre-filing internal reorganization of Halliburton subsidiaries described in the solicitation materials for the reorganization plan was completed as of Dec. 15.

In addition, Halliburton's offer to issue 7.6% notes in exchange for outstanding 7.60% notes of DII Industries has been completed, and Halliburton issued $294 million of its 7.6% notes on Dec. 15 in exchange for an equal amount of DII debentures.

Houston-based Halliburton provides services and products to the petroleum and energy industries.

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