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TRANSTECH INDUSTRIES, INC. ENTERS INTO AGREEMENT
TO SETTLE INSURANCE CLAIMS
PISCATAWAY, N.J., October 10, 2001 - Robert V. Silva, President and Chief Executive Officer of Transtech Industries, Inc. (OTC BULLETIN BOARD:TRTI) announced that certain of its excess insurance carriers have executed an agreement to settle claims brought by Transtech and certain of its subsidiaries (the "Company"). The claims have been the subject of litigation commenced by the Company in 1995 seeking reimbursement for past remediation costs. Pursuant to the settlement each insurer participating in an underlying policy is severally responsible for its pro-rata share of the stipulated settlement amount. The settlement shall be consummated if at least 84.75% of the settlement amount is paid into escrow by February 4, 2002. The Company intends to pursue its claims against non-settling insurers. The settlement proceeds will be shared with a group of companies participating in the remediation of a site in Carlstadt, New Jersey (the "Carlstadt PRPs") in accordance with a 1995 agreement, as amended, that resolved litigation regarding the allocation of that site's remediation costs. The Company anticipates the settlement, if consummated, should provide the Company proceeds of approximately $13.0 million. The Company believes its proceeds will be subject to federal and state income taxes.
The Company agreed, among other things, to release the settling insurers from their future obligations with respect to all policies issued to the Company. The Company also agreed to indemnify the settling insurers against claims made on such policies by other parties. However, if a claim is Carlstadt site related, the Company is obligated to indemnify only to the extent such indemnification is not first provided by the Carlstadt PRPs.
As previously disclosed, the Company had committed to pay a portion of its settlement proceeds, up to a maximum of $3.5 million, pursuant to an agreed upon formula, to a party to the 1997 agreements that resolved litigation regarding the Kin-Buc Landfill. The amount of this obligation, if any, has yet to be determined. A portion of the proceeds is also due to counsel representing the Company in the excess insurers litigation and other matters.
In addition, the Company faces significant cash requirements for its federal and state income tax obligations, operating expenses and remediation costs associated with sites of past operations. The Company has been assessed federal income taxes and interest totaling $4.0 million in conjunction with the resolution of issues before the US Tax Court. The Company has filed an Offer in Compromise with the Internal Revenue Service which requests the Service to reduce the obligation and accept payment in installments. The proceeds remaining after an immediate payment of the full tax obligations may be insufficient to satisfy the Company's other obligations and meet its operating expenses as they come due. In addition, the U.S. Environmental Protection Agency ("EPA") is investigating the Company's relationship to a site in Piscataway, New Jersey. EPA is seeking contribution toward $2.9 million of costs incurred for the site. The Company continues to pursue the sale of property held for sale, however, no assurance can be given that the timing or amount of the proceeds from such sources, and revenue generated by the Company's operations, will be sufficient to meet the cash requirements of the Company.
This news release may contain forward-looking statements as defined by federal securities laws, that are based on current expectations and involve a number of known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by this press release. Such risks and uncertainties include among others, the following : general economic and business conditions; the ability of the Company to implement its business strategy; the Company’s ability to successfully identify new business opportunities; changes in the industry; competition; the effect of regulatory and legal proceedings. The forward-looking statements contained in this news release speak only as of the date of the release; and the Company does not undertake to revise those forward-looking statements to reflect events after the date of this release.
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