Companies agree to end the dispute with Chemours over potential liabilities.
DuPont, Corteva, Inc., and The Chemours Company entered into a memorandum of understanding that will create a $4 billion fund aimed at managing the costs of lawsuits over the use of PFA chemicals.
DuPont and Corteva will establish a cost-sharing arrangement and escrow account to support and manage potential future PFAS liabilities.
The uncertainties arising from the litigation have weighed down stock prices for all three companies, with Corteva now facing a proxy fight for control of the board.
Corteva was spun off from the DowDuPont merger as the combined seeds and crop protection business of the two companies, with Corteva winding up with some of DuPont’s liabilities.
The agreement replaces the February 2017 PFOA Settlement and subsequent amendment to the Chemours Separation Agreement. DuPont, Corteva, and Chemours have agreed to resolve the ongoing matters in the multi-district PFOA litigation in Ohio.
PFA’s, sometimes known as “forever chemicals,” have made their way into waterways and even Hollywood amid allegations of ties to cancer.
The chemicals, their impact, and the work of a lawyer suing DuPont were topics of the movie “Dark Waters. The movie was based on a widely read New York Times magazine story, “The Lawyer Who Became DuPont’s Worst Nightmare.” DuPont has claimed the movie was inaccurate.
PFAs were also used in firefighting training and incidents at airports, with the chemicals making their way into water supplies.
Chemours has been claiming that DuPont had not fully disclosed liabilities in the 2015 spin-off of its chemical operations to the new company and asked that the previous arbitration agreement be voided. Chemours lost the case in Delaware courts.
According to the terms of the cost-sharing arrangement, DuPont and Corteva together, on the one hand, and Chemours, on the other, agree to a 50-50 split of certain qualified expenses over a term not to exceed 20 years for a maximum of $4 billion.
DuPont and Corteva’s 50 percent will be limited to $2 billion, including qualified expenses and escrow contributions.
Under the existing agreement from June 1, 2019, DuPont and Corteva will each bear 50 percent of the first $300 million (up to $150 million). Thereafter, DuPont bears 71, and Corteva bears the remaining 29 percent. DuPont’s share of the potential $2 billion would be approximately $1.36 billion, and Corteva’s approximately $640 million.
In connection with the cost-sharing arrangement described above, the companies also agree to establish a $1 billion maximum escrow account to address potential future PFAS liabilities.
Subject to the terms of the arrangement, contributions to the escrow will be made by Chemours, on the one hand, and DuPont and Corteva, on the other hand, annually over an eight-year period. Over that period, Chemours will deposit a total of $500 million into the account, and DuPont and Corteva will deposit an additional $500 million under the terms of their existing agreement.
After the term of this arrangement, Chemours’ indemnification obligations under the Chemours Separation Agreement would continue unchanged, subject to certain exceptions.
For its part, Chemours will waive specified claims that led to the litigation mentioned above. DuPont and Corteva agreed to force arbitration. Also, DuPont, Corteva, and Chemours have agreed to resolve the Ohio multi-district PFOA litigation matters for $83 million. DuPont will contribute $27 million, Corteva will contribute $27 million, and Chemours will contribute $29 million to the settlement.
The agreement resolves approximately 95 pending cases and other matters.
Ed Breen, DuPont CEO; Jim Collins, Corteva CEO and Mark Vergnano, Chemours and CEO, issued the following:
“We are pleased to have reached a settlement agreement between our companies related to potential legacy PFAS liabilities, as well as resolving the remaining PFOA MDL cases in Ohio. The agreement will provide a measure of security and certainty for each company and our respective shareholders using a transparent process to address and resolve any potential future legacy PFAS matters.”
