Plastics Conglomerate: PRP Liability Associated with Acquisition

 

An English-owned coatings and plastics conglomerate was seeking to make acquisitions in the United States. They had identified a possible acquisition but requested an initial evaluation of potential environmental liabilities before identifying their interest. Using information from 10K filings, First Environment performed a blind EPA file review for two Superfund sites at which the

potential acquisition had been named as a PRP. Since full characterization had not been completed at the identified Superfund sites, the EPA project managers would not provide any information on projected costs, with the exception that they had settled with the de minimus contributors.

 

Using this information and our knowledge of likely site remediation costs, we were able to estimate total costs. We then distributed the projected costs among the remaining PRPs based on quantity and types of wastes. We identified a potential liability of 8 to 12 million dollars for the corporation. Our client decided not to pursue the acquisition.

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OBJECTIVE
  • Screen potential acquisitions for environmental liability
  • Preserve anonymity

FACTS
  • Manufacturing facilities that were named PRPs at 2 Superfund sites

STRATEGY
  • Review EPA files
  • Estimate total cleanup costs
  • Develop allocation approach

RESULTS
  • $8 - 12 million potential liability
  • Client did not pursue acquisition
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