8-KOther Events

American Water Works Company, Inc. 8-K Report, Corporate Update (Sep 22, 2017)

Filed September 22, 2017For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced on September 22, 2017, that the U.S. District Court for the Southern District of West Virginia granted preliminary approval for a settlement regarding claims stemming from the January 2014 Freedom Industries, Inc. chemical spill into the Elk River. This settlement primarily involves West Virginia-American Water Company (WVAWC), a subsidiary, and aims to resolve all federal and state litigation and potential claims against American Water Defendants related to the spill. The total pre-tax settlement amount for the Company remains $126 million. However, the net contribution from WVAWC has been reduced from $65 million to $43 million (approximately $26 million after-tax) due to a recent settlement with an insurance carrier. This revised structure positively impacts WVAWC's direct financial outlay. The settlement terms do not admit fault or liability by the American Water Defendants, and claimants have the option to opt out.

Key Highlights

  • 1Preliminary court approval received for a settlement class and proposed settlement concerning the 2014 Freedom Industries chemical spill.
  • 2The aggregate pre-tax settlement amount for American Water Works remains $126 million.
  • 3West Virginia-American Water Company's (WVAWC) net contribution reduced to $43 million (approx. $26 million after-tax) due to insurance recovery.
  • 4The settlement resolves all federal and state litigation and potential claims against American Water Defendants and their insurers.
  • 5American Water Defendants have not admitted, and will not admit, any fault or liability.
  • 6Claimants have the right to opt out of the final settlement.
  • 7Potential for up to $50 million from WVAWC and $25 million from another defendant to be contributed to an escrow account if final approval is appealed and delayed.

Frequently Asked Questions

The filing announces that the U.S. District Court granted preliminary approval for a settlement related to claims arising from the 2014 Freedom Industries chemical spill in West Virginia. This involves American Water Works Company's subsidiary, West Virginia-American Water Company.

The total aggregate pre-tax settlement amount remains $126 million. However, due to a settlement with an insurance carrier, the net contribution required from West Virginia-American Water Company has been reduced to $43 million (approximately $26 million after-tax), a decrease from the previously stated $65 million.

No, under the terms of the settlement, the American Water Defendants have not admitted, and will not admit, any fault or liability for any of the allegations made by the plaintiffs.

Under federal class action rules, claimants have the right to opt out of the final settlement. If a significant number of claimants opt out, the American Water Defendants may have the right to withdraw from the settlement.