Joseph Lemieux's last regret yesterday as he prepared to hand over Owens-Illinois Inc.'s chairman post was that asbestos liabilities continue to plague the $6.2 billion Toledo glass and plastic packaging firm.
Asbestos liabilities were a problem when the 100-year-old company started trying to regain its status as a public company in 1991, the year after Mr. Lemieux became chief executive. Asbestos claims have accounted for more than $2 billion in charges in the last decade, including $450 million last year, an amount contributing to O-I's $991 million loss in 2003.
Yet the issue of asbestos liabilities won't prompt O-I to seek bankruptcy protection as fellow Toledo company Owens Corning has, Mr. Lemieux said.
"We never believed it would last as long as it did," he told roughly 150 investors and employees at the company's annual shareholders meeting at One Seagate, O-I's corporate headquarters in downtown Toledo.
Yesterday, Mr. Lemieux spent his last day as I chairman, a post assumed by Steven R. McCracken, who had become chief executive April 1. After the meeting, Mr. McCracken said asbestos claims against the company declined last quarter, and charges will decline as well.
"Our view is that we're in fairly decent shape, although it is a significant burden on the operating group," he said.
This year, O-I is working to divest about half of its $1.9 billion plastics business and consummate a $1.5 billion acquisition of BSN Glasspack SA, France's second-largest glass company.
Mr. McCracken said O-I intends to retain plastics operations that make health-care products and container closures. The firm is discussing with potential strategic and financial buyers the sale of the rest, which makes containers for uses including food and shampoo.
Despite O-I's having to take on more debt to acquire BSN Glasspack - it has lined up all the financing for the purchase - Mr. McCracken said he backs the decision. Buying a large European player is a good strategic move, and there will be beneficial savings in the combination, he said. The Toledo company had $5.4 billion in debt at the end of last year.
During the meeting, shareholders approved a proposal to award eligible directors restricted stock in addition to stock options. They also approved a proposal allowing O-I to take income tax deductions for performance-based bonuses to executives .
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