Westinghouse split
may affect PCB cleanup
Officials unsure if move will change
company's ability to fulfill agreement
by Jennifer Jill Fowler
November 17, 1996
reprinted with permission of the Sunday Herald-Times, Inc.
Bloomington officials are investigating how a decision by Westinghouse
Electric Corp. to separate its industrial business from the CBS television
network will affect the local PCB cleanup. "The answer at this point
is we do not know," said Geoff Grodner, Bloomington's attorney on PCB
matters. "We have been actively following the announcements about the
spinoff of the industrial division. We have been unable to find any published
information concerning the net worth of the new Welco."
Welco, (Westinghouse Electric Co) is the new name of the industrial operation,
including power generator manufacturing operations and Thermo King, which
makes refrigerated trucks. Westinghouse officials say those operations will
have $4.6 billion in revenues and be based in Pittsburgh. In two years,
the new company will have 1,100 fewer employees. The media company will
include television and radio broadcaster CBS, radio giant Infinity Broadcasting,
whose acquisition is pending, and Group W Satellite Communications, a cable
TV marketing and distribution unit. It will take on a new name and remain
in New York.
The corporation's ability to live up to the 1985 agreement with Bloomington
will depend on how it balances its finances between the two new companies.
"We are very concerned that the spin-off is going to result in separate
companies, neither of which will have the net worth equal to that of the
combined company prior to spinoff," Grodner said. "It is our position
that Westinghouse is obligated to provide us with financial security consistent
with article 19 of the consent decree."
The agreement known as a consent decree specifies that, if the consolidated
net worth of Westinghouse declines by 50 percent, the company "must
promptly provide security in an amount equal to 125 percent of the estimated
net cost to complete" cleanup activities. The agreement was signed
in 1985 by the City, Monroe County, the Indiana Department of Environmental
Management, the U.S. Environmental Protection Agency and Westinghouse.
At that time Westinghouse had a net worth of $3.8 billion. Grodner has
requested a balance sheet from Westinghouse's lead attorney detailing the
firm's net worth. "Once we get that we'll be in a better position to
analyze this," Grodner said. But, he said, even if the split does dilute
the net worth of Welco, the consent decree stipulates Westinghouse and its
successors are responsible for upholding the terms of agreement. In other
words, it looks like both companies still would be liable to provide security
for the cleanup.
Meanwhile, Westinghouse officials said shareholders will receive a tax-free
dividend in the form of new shares of Welco when the spinoff occurs in six
to nine months. Westinghouse hopes the two stock certificates held by each
shareholder add up to a lot more than $20, the current range the shares
are trading in. Welco and the broadcast business each will have its own
board of directors and publicly traded stock after the split. |
