Summary
Honeywell International Inc. (HON) filed an 8-K on October 15, 2018, to disclose material definitive agreements related to the previously announced spin-off of its Resideo Technologies, Inc. subsidiary. The primary agreement is an Indemnification and Reimbursement Agreement between a Resideo subsidiary and Honeywell, effective October 14, 2018. This agreement details the allocation of responsibility for certain environmental and hazardous exposure liabilities stemming from historical business operations. Under this agreement, the Resideo subsidiary will reimburse Honeywell for 90% of payments made concerning specified historical environmental liabilities, including remediation costs and defense expenses, less 90% of insurance receipts and other recoveries. The annual reimbursement from Resideo to Honeywell is capped at $140 million. This arrangement aims to clearly define financial responsibilities for these legacy issues post-spin-off, providing clarity for investors regarding Honeywell's ongoing exposure to these specific liabilities.
Key Highlights
- 1Honeywell entered into a material definitive agreement on October 14, 2018, related to the spin-off of Resideo Technologies, Inc.
- 2An Indemnification and Reimbursement Agreement was established between a Resideo subsidiary and Honeywell.
- 3Resideo subsidiary will reimburse Honeywell for 90% of payments related to specified historical environmental and hazardous exposure liabilities.
- 4The agreement covers remediation, defense costs, and consequential damages for contaminated properties from historical operations.
- 5Resideo's annual payment obligation to Honeywell is capped at $140 million, excluding late fees.
- 6Payments may be deferred under certain default or financial covenant conditions for Resideo's indebtedness.
- 7The reimbursement obligation is set to continue until December 31, 2043, or until annual obligations fall below $25 million for three consecutive years.