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Wellman signs settlement deal with 33 polyester stable fiber purchasers

16 Jun '05

2 min read

Leading PermaClear brand PET manufacturer & marketer Wellman Inc announced it will record a pretax charge of $24 million in the second quarter of 2005 that is expected to cover the cost of a settlement with 33 purchasers of polyester staple fiber as well as expected future costs to defend or settle all other civil claims alleging that the Company engaged in price fixing and customer allocation for sales of polyester staple fiber. The after-tax effect of the charge will be $15.6 million.

The Company has entered into a settlement agreement with 33 purchasers of polyester staple fiber that represent more than half of the volume of polyester staple fiber sold in North America from April 1999 to July 2001. The settlement agreement states that the Company denies any wrongdoing and acknowledges that the Company has strong defenses to any claims; however, it is entering into the settlement agreement to minimize future expenses, risk and disruption of business that occurs with any litigation.

The settlement results in the dismissal of previously filed civil claims relating to the purchases of polyester staple fiber and these purchasers have agreed to release any claims, whether individually or as part of a class, against Wellman and any of its employees. The Company has also agreed, under certain circumstances and for a limited period of time, to increase the settlement payment if it agrees to settle other similar claims for a greater amount.

Thomas M. Duff, Wellman's Chief Executive Officer, stated, "Even though the Company did not engage in any illegal actions, this settlement is a prudent action to eliminate a substantial number of claims. We will continue to vigorously defend any other claims unless we can settle them in a cost effective manner."

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