W.R. Grace Acquitted in Asbestos Case, Shares Leap

Source: Reuters
By Clare Baldwin
Fri May 8, 2009 5:24pm EDT

SAN FRANCISCO (Reuters) - A federal jury in Montana acquitted chemical company W.R. Grace & Co and three of its executives on Friday on all counts in an asbestos environmental case, and its stock surged 36 percent.

The company and executives had been charged by a division of the Justice Department with knowingly endangering the lives of mine workers and other residents of Libby, Montana, near the Canadian border, and ignoring warnings by state agencies.

"We at Grace are gratified by today's verdict," Grace Chief Executive Fred Festa said in a statement on Friday.

"We always believed that Grace and its former executives had acted properly and that a jury would come to the same conclusion when confronted with the evidence," he said.

The case had been brought by the Justice Department's Environment and Natural Resources Division and the U.S. attorney for the district of Montana.

"The verdict was returned earlier today in open court: not guilty on all counts for all defendants," said Patrick Duffy, a clerk at the federal court in Missoula, Montana.

Grace, which is based in Columbia, Maryland, owned and operated a vermiculite mine and vermiculite processing facilities in and near Libby from 1963 to 1990. Vermiculite ore contaminated with asbestos -- a known human carcinogen -- was found nearby, according to the U.S. government.

The EPA began removing asbestos contamination in 2000 and Grace filed for bankruptcy protection from cleanup costs in 2001. The EPA filed to recover costs in 2003 and Grace agreed to pay $250 million in March 2008. The payment was the largest cash recovery under the Superfund law for cleaning up polluted sites, the Justice Department said at the time.

"The company worked hard to keep the operations in compliance with the laws and standards of the day," Grace said in a statement.

Vermiculite is used in many common commercial products, including attic insulation, fireproofing materials, masonry fill, and as an additive to potting soils and fertilizers.

Shares in the company, which is worth $945 million, were up 36 percent at $13.06. The stock has now doubled so far in 2009, after hitting a four-year low of $2.96 in November.

(Reporting by Clare Baldwin in San Francisco and Steve James in New York; Editing by Braden Reddall, Bernard Orr, Gary Hill)