- HOUSTON, (Reuters) -
Halliburton
Co. shares fell more than 40 percent on Friday, hitting their lowest level
in almost 10 years on news of mounting asbestos problems for the
Dallas-based
oilfield services and engineering giant.
-
- Halliburton, headed until August 2000 by U.S. Vice
President
Dick Cheney, said in a filing with the Securities and Exchange Committee
that a Baltimore jury had awarded $30 million in asbestos damages against
its Dresser Industries subsidiary.
-
- The Baltimore verdict brings recent asbestos liability
awards against the company to over $150 million.
-
- Halliburton's shares closed down $8.85, or 42.5 percent,
at $12 after touching an intraday low of $10.99, a level last seen in April
1992. Halliburton was the most actively traded stock on the New York Stock
Exchange.
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- ABN AMRO analyst Stephen Gengaro said he has long been
telling investors to shun Halliburton because of its exposure to asbestos
lawsuits, recommending they invest instead in rival oilfield service
companies
such as Baker Hughes Inc.
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- "We don't think there's such a thing as a manageable
asbestos problem. If you invest in oilfield services why would you want
to expose yourself to that when you don't have to?" he asked.
-
- Asbestos was once widely used as a fireproofing and
insulation
material and in asbestos-cement products, but scientists concluded in the
1960s and 1970s that inhalation of asbestos fibers could cause diseases
including lung cancer.
-
- In a statement released after the close of trading on
Friday, Halliburton said it will appeal the verdicts and that insurance
should cover most of the costs if the appeals do not succeed.
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- The company said it will be involved in several more
asbestos trials in the coming months and will provide timely information
to investors about their outcome. It said it will continue to seek the
settlement of claims for reasonable amounts but will take cases to trial
if such settlements cannot be reached.
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- EXTENSIVE DISCLOSURES
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- Halliburton has made extensive disclosures about its
potential asbestos liability in quarterly filings with the Securities and
Exchange Commission, but has always maintained that the issue does not
pose a major threat to the company.
-
- However, the recent flurry of big verdicts against the
company appear to have put things in a different light.
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- "I'd say it's taken a significant turn for the worse
and it's gotten investors alarmed," said Lehman Brothers analyst Jim
Crandell. "Asbestos hasn't had too many happy outcomes for companies
at the end of the day," he added.
-
- Asbestos litigation has led several major U.S. companies
to file for Chapter 11 bankruptcy protection in the last few years,
including
specialty chemicals company W.R. Grace & Co. and building materials
maker USG Corp.
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