ITT announces the sale of the liabilities inherited from its subsidiary to Delticus, a subsidiary of Warburg Pincus

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WHITE PLAINS, NY – (COMMERCIAL THREAD) – July 1, 2021 – ITT Inc. (NYSE: ITT) today announced the disposal of InTelCo Management LLC (“InTelCo”), a wholly-owned subsidiary that holds long-term liabilities, including liabilities asbestos-related and related insurance assets, to Delticus HoldCo, LP (“Delticus”), a corporate responsibility consolidation vehicle and holding company of Warburg Pincus LLC, one of the world’s leading companies of private equity.

“Today’s announcement represents the culmination of our multi-year strategy to reduce ITT’s wealth liability profile,” said Luca Savi, President and CEO of ITT. “This transaction, along with the successful termination of our US pension plan executed in October 2020, positions us very favorably for future growth and flexibility of capital. ”

Savi continued, “The transaction allows ITT to permanently divest from its asbestos-related commitments and transfer them to a high-quality partner in Delticus. ITT will operate with a streamlined, well-capitalized balance sheet, an increased focus on our core business, including our sustainability initiatives, and without the risks and management time required to manage asbestos-related liabilities over the long term. Going forward, ITT will be able to more effectively invest future capital and cash flows in product innovation and organic and inorganic growth initiatives.

The estimated impact of the divestiture will be a one-time after-tax loss of approximately $ 27 million that will be recognized in the second quarter of 2021 and excluded from adjusted earnings per share.

Overview of transactions

Delticus acquired 100% of the capital of InTelCo, which indemnifies ITT for all asbestos-related liabilities. At closing, ITT paid approximately $ 398 million in cash to InTelCo. As a result of the transaction, ITT removed all asbestos-related obligations, related insurance assets and associated deferred tax assets from the company’s consolidated balance sheet.

Delticus will assume the operational management of InTelCo, including the administration of all asbestos-related claims and the collection of reimbursements from existing insurance policies.

Evercore acted as ITT’s exclusive financial advisor in connection with the transaction, and Simpson Thacher & Bartlett LLP acted as legal advisor. Jefferies acted as exclusive financial advisor to Delticus, and Kirkland & Ellis LLP acted as legal advisor.

Context of InTelCo

In 2016, ITT established InTelCo Management LLC as part of a corporate reorganization to hold all asbestos-related liabilities inherited from ITT LLC and Goulds Pumps LLC and related insurance assets. The reorganization enabled ITT to more effectively manage insurance liabilities and assets under a single, well-capitalized entity with its own focused management team. The InTelCo team has extensive experience in insurance litigation and litigation defense and collection and will continue in their current role at Delticus. This structure will provide significant operational and financial efficiency gains after the sale.

About Delticus

Delticus is a leading institutionally funded corporate responsibility consolidation vehicle focused on acquiring and managing long-tail legacy corporate liabilities of various forms. Based in Wilmington, DE but operating worldwide, Delticus offers holders of various forms of corporate liabilities a complete risk transfer through an outright business sale. Delticus is a holding company of Warburg Pincus, a leading global private equity firm, with over 30 years of experience in investing in financial services. For more information, please visit www.delticusgroup.com.

About ITT

ITT is a leading and diverse manufacturer of high-engineered critical components and customized technology solutions for the transportation, industrial, oil and gas markets. Building on its heritage of innovation, ITT partners with its customers to deliver sustainable solutions to the key industries that underpin our modern way of life. ITT is headquartered in White Plains, NY, with employees in over 35 countries and sales in approximately 125 countries.

Safe Harbor Declaration

This press release contains “forward-looking statements” intended to benefit from the safe harbor of liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but are rather based on expectations, current estimates and assumptions. and projections regarding our business, our future financial results and the industry in which we operate, as well as other legal, regulatory and economic developments. These forward-looking statements include, without limitation, future strategic plans and other statements describing the business strategy, prospects, objectives, plans, intentions or goals of the company, as well as any discussion of future events and future operational or financial performance.

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Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are the risks and uncertainties inherent in our business, including, without limitation: impacts on our business due to the COVID-19 pandemic, including disruptions to our operations and demand for our products, increased costs, supply chain disruption and other constraints in the availability of key products and others necessary services, government-mandated site closures, illness of employees or loss of key personnel, impact of travel and stay restrictions imposing restrictions on our business and workforce, bankruptcies customers and suppliers, the impacts on the global economy and financial markets, and liquidity problems in accessing capital markets; uncertain global economic and financial conditions, including due to COVID-19, trade disputes between the United States and its trading partners, and fluctuations in oil prices; risks arising from our operations and sales outside the United States and in emerging markets; fluctuations in foreign currency exchange rates; fluctuations in demand or levels of customer capital investment and maintenance expenses, particularly in the oil and gas, chemical and mining markets, or changes in our customers’ anticipated production schedules, particularly on the commercial aerospace market; the inability to successfully compete and innovate in our markets; the extent to which there are quality issues with respect to manufacturing processes or finished products; government procurement risks, including changes in government spending levels and regulatory and contractual requirements applicable to sales to the US government; the volatility of raw material prices and the ability of our suppliers to meet quality and delivery requirements; failure to effectively manage the distribution of products and services; the loss or decrease in sales of our most important customers; fluctuations in our effective tax rate; failure to protect our intellectual property rights or infringements of the intellectual property rights of others; the risk of significant business interruptions, particularly in our manufacturing plants; the risk of cybersecurity breaches; changes in laws relating to the use and transfer of personal and other information; failure of portfolio management strategies, including cost reduction initiatives, to meet expectations; the liability risk linked to past disposals and spin-offs; changes in environmental laws or regulations, the discovery of previously unknown or more extensive contamination, or the failure to perform by a potentially responsible party; failure to comply with US Foreign Corrupt Practices Act or other applicable anti-corruption laws, export controls and trade sanctions, including recently announced tariffs; and the risk of product liability claims and litigation. More information about factors that could cause actual results or events to differ materially from those anticipated is included in our reports filed with the Securities and Exchange Commission (SEC), including our annual report on Form 10 -K for the fiscal year ended December 31, 2020 (particularly under the heading “Risk Factors”), our quarterly reports on Form 10-Q and in other documents that we file from time to time with the SEC.

The forward-looking statements included in this press release speak only as of the date hereof. We do not undertake to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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