ITT has divested InTelCo Management LLC, a wholly owned subsidiary that holds long-term liabilities including asbestos liabilities and related insurance assets, to Delticus HoldCo L.P.
Based in Wilmington, Delaware, Delticus is a corporate liability consolidation vehicle and portfolio company of Warburg Pincus LLC, a leading global private equity firm.
The move “represents the culmination of our multi-year strategy to reduce ITT”™s legacy liability profile,” said ITT President and CEO Luca Savi. “This transaction, along with our successful U.S. pension plan termination executed in October 2020, position us very favorably for future growth and capital flexibility.”
As a result of the transaction, Savi said, “ITT will operate with a simplified and well-capitalized balance sheet, a heightened focus on our core business, including our sustainability initiatives, and without the risks and management time required to manage long-term asbestos liabilities. Going forward ITT will be able to more effectively invest capital and future cash flows into product innovation and organic and inorganic growth initiatives.”
The estimated impact of the divesture will be a one-time after-tax loss of approximately $27 million to be recorded in the second quarter of 2021 and excluded from adjusted earnings per share.
At closing, ITT contributed approximately $398 million in cash to InTelCo. Delticus will assume the operational management of InTelCo, including the administration of all the asbestos claims and collection of existing insurance policy reimbursements.
Evercore acted as exclusive financial advisor to ITT in connection with the transaction, and Simpson Thacher & Bartlett LLP served as its legal counsel. Jefferies acted as exclusive financial advisor to Delticus, and Kirkland & Ellis LLP served as its legal counsel.
ITT recently announced plans to relocate its corporate headquarters from White Plains to Stamford.
