8-KMaterial AgreementsOther EventsExhibits & Filings

HONEYWELL INTERNATIONAL INC 8-K Report, Material Agreement (Dec 14, 2022)

Filed December 14, 2022For Securities:HONHONIV

Summary

Honeywell International Inc. (HON) has filed an 8-K detailing a significant settlement agreement to resolve its ongoing asbestos-related liabilities stemming from its former North American Refractories Company (NARCO) subsidiary. The company will make a one-time lump sum payment of $1.325 billion to the NARCO Asbestos Personal Injury Settlement Trust. This payment aims to release Honeywell from all future obligations related to NARCO asbestos claims and the Trust's operating expenses, which previously represented an ongoing evergreen funding commitment. The settlement, approved by the U.S. Bankruptcy Court, is expected to close shortly after January 1, 2023. Honeywell will recognize a charge in the fourth quarter of 2022 related to this buyout payment. However, this charge will be partially offset by approximately $300 million in net proceeds from the anticipated sale of HarbisonWalker International Holdings, Inc. (HWI) to an affiliate of Platinum Equity, LLC. The economic rights of the Trust in the HWI sale proceeds will benefit Honeywell.

Key Highlights

  • 1Honeywell to make a $1.325 billion one-time payment to the NARCO Asbestos Personal Injury Settlement Trust to resolve future asbestos liabilities.
  • 2This settlement aims to eliminate Honeywell's ongoing 'evergreen' obligation to fund asbestos claims and the Trust's operating expenses.
  • 3The U.S. Bankruptcy Court has approved the settlement agreement.
  • 4The transaction is expected to close promptly after January 1, 2023.
  • 5Honeywell will record a charge in Q4 2022 related to the settlement payment.
  • 6Anticipated sale of HarbisonWalker International Holdings, Inc. (HWI) to Platinum Equity affiliate will generate ~$300 million in net proceeds, partially offsetting the settlement charge.
  • 7The NARCO asbestos-related reserve will be reduced to reflect estimated claims paid by Honeywell up to the closing date.

Frequently Asked Questions

The $1.325 billion payment is a one-time lump sum to the North American Refractories Asbestos Personal Injury Settlement Trust. Its purpose is to fully release Honeywell International Inc. from all present and future obligations related to asbestos claims arising from its former NARCO subsidiary and the Trust's operating expenses.

Honeywell will recognize a charge in the fourth quarter of 2022 associated with the $1.325 billion buyout payment. However, this charge will be partially offset by approximately $300 million in net proceeds expected from the sale of HarbisonWalker International Holdings, Inc. (HWI).

The sale of HWI to an affiliate of Platinum Equity, LLC is significant because the net proceeds from this sale will directly benefit Honeywell by approximately $300 million. These proceeds will be used to offset a portion of the charge related to the asbestos settlement.

The Bankruptcy Court's order approves the settlement agreement and ensures that the NARCO Channeling Injunction remains in effect. This injunction prevents individual lawsuits related to NARCO asbestos exposure, directing all such claims to the Trust, and provides Honeywell with the certainty of release from its obligations upon closing the transaction.