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.
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.
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.
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