With much fanfare, chemical giant DuPont recently announced that it was spinning off much of its outstanding environmental liabilities into a new standalone company called The Chemours Company. This spin off came on the heels of intense pressure from activist investor Nelson Peltz, who has been clamoring to rein in wasteful spending and less profitable aspects of the more than two hundred year old global conglomerate. However, contrary to public statements and official governmental submissions related to the spin off – recently filed court documents indicates that much of the environmental liability with remain with the parent company DuPont.
DuPont is currently facing thousands of lawsuits and is responsible for funding a medical monitoring program for as much as $235 million relating to its Washington Works facility in West Virginia. Specifically, it has been alleged that DuPont knowingly and recklessly exposed ~80,000 to the DuPont Teflon chemical PFOA (also known as “C8”) by way of contaminating their drinking water over more than five decades. It is this environmental liability DuPont was seeking to shed, at least publicly, through the spin off of The Chemours Company.
The Chemours Company Form 10 filing explicitly states that “liabilities” related to legal proceedings “including with respect to PFOA, will be retained by or transferred to” The Chemours Company. News of the spin off has been well received by DuPont shareholders – sending DuPont’s stock higher immediately after the announcement. However, recently filed documents in the PFOA litigation that DuPont claims to have “spun off” appear to directly contradict these public statements and submissions.
In documents filed in an Ohio federal court, Justin M. Miller, Associate General Counsel for DuPont stated that the obligations of DuPont relating to the PFOA litigation would “remain obligations of DuPont” and that perhaps most alarming that The Chemours Company “agrees to indemnify DuPont for any payments that DuPont may be required to make.” Meaning DuPont is the one ultimately financially responsible for this environmental catastrophe.
So it would appear that DuPont has successfully spun off nothing – and in reality this is nothing more than an attempt to improve its public image by trying to separate itself from its troubled past of environmental misconduct.