What is the primary purpose of the MOU between Corteva, DuPont, and Chemours?

The primary purpose of the MOU is to settle and release claims related to historical environmental liabilities from per- and polyfluoroalkyl substances (PFAS), including PFOA, arising from conduct prior to July 1, 2015. It establishes a framework for sharing the costs of potential future liabilities and resolving ongoing legal disputes.

What is Corteva's financial exposure under this agreement?

Corteva, along with DuPont, will collectively bear up to $2 billion of the total $4 billion cap on future PFAS liabilities. Their share of costs for managing these liabilities will be determined by a separate letter agreement, which outlines a 50/50 split up to $300 million and a subsequent 29% (Corteva) / 71% (DuPont) split thereafter for certain shared liabilities. Additionally, Corteva will recognize its share of the recently settled personal injury cases ($27 million) as a charge to discontinued operations.

How will the settlement costs be funded?

The settlement costs will be managed through an escrow account funded by annual deposits from Chemours, DuPont, and Corteva. The exact amounts and timelines for these deposits are detailed in the MOU, with provisions for replenishment if the escrow balance falls below $700 million by the end of 2028. Corteva's contributions to the escrow account will follow the cost-sharing arrangement outlined in the June 1, 2019 Letter Agreement with DuPont.

Does this settlement resolve all PFAS-related litigation for Corteva?

The settlement resolves the claims in the Multi-District Litigation (MDL) for approximately $83 million, with Corteva contributing $27 million of that amount. However, the MOU aims to resolve broader claims and prevent future disputes related to the Chemours Separation and historical PFAS liabilities. It is important to note that the case 'Travis and Julie Abbott v. E. I. du Pont de Nemours and Company' is not included in the MDL settlement and remains pending.

CTVA 8-K: Material Agreements & Financial Events

Summary

Corteva, Inc. (CTVA) announced a significant resolution concerning past environmental liabilities related to per- and polyfluoroalkyl substances (PFAS), including PFOA. The company entered into a binding Memorandum of Understanding (MOU) with DuPont and The Chemours Company to settle and release claims related to the "Delaware Litigation" and a pending arbitration. This agreement addresses potential future legacy liabilities stemming from historical PFAS releases prior to July 1, 2015. Under the MOU, Chemours, DuPont, and Corteva will share costs for potential future PFAS liabilities up to a total of $4 billion, ending by December 31, 2040. Specifically, Chemours will bear half the costs, while DuPont and Corteva collectively bear the other half, with their combined share capped at $2 billion. Furthermore, an escrow account will be established with significant contributions from all parties to manage these liabilities. Corteva will recognize its share of the settlement as a charge to income from discontinued operations.

Key Highlights

1Corteva, DuPont, and Chemours have entered into a Memorandum of Understanding (MOU) to resolve historical PFAS/PFOA litigation and arbitration.
2The agreement establishes a cost-sharing framework for potential future legacy PFAS liabilities arising from pre-July 1, 2015 conduct.
3Total spending on PFAS liabilities under this arrangement is capped at $4 billion, with an end date of December 31, 2040.
4Chemours will cover 50% of the costs, while DuPont and Corteva will jointly cover the remaining 50%, with Corteva and DuPont's aggregate share capped at $2 billion.
5An escrow account is being established with mandatory annual contributions from Chemours, DuPont, and Corteva to manage these liabilities.
6Corteva will recognize its share of the settlement, approximately $83 million for the MDL cases, as a charge to income from discontinued operations.

Corteva, Inc. 8-K Report, Material Agreement (Jan 22, 2021)

Summary

Key Highlights

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