Manufacturing giant 3M announced an agreement on Tuesday to end lawsuits over hearing loss by military members who used its Combat Arms earplugs. Although the company does not expressly admit its guilt and ensures that the plugs are effective when used properly, it has agreed to pay 6,000 million dollars (about 5,500 million euros at current exchange rates), between 2023 and 2029, as reported to the United States Securities and Exchange Commission (the SEC).
Under the agreement, 3M will contribute a total amount of $6 billion between 2023 and 2029, consisting of $5 billion in cash and $1 billion in treasury stock. The company will record a pre-tax charge of approximately $4.2 billion in third-quarter 2023 results, the equivalent of the pre-tax present value of $5.3 billion of agreed contributions, less the provision it already had in place of approximately $1.1 billion. to deal with this matter.
3M purchased Aearo Technologies (Aearo) in 2008. The company manufactured earplugs for use by the military between 1999 and 2015. The plugs, however, did not prevent more than hundreds of thousands of military personnel from suffering hearing loss while undergoing to the noise of shots and explosions in armed conflicts such as those in Afghanistan and Iraq. The company had been sued by more than 250,000 Army veterans.
“This historic settlement represents a tremendous victory for the thousands of men and women who bravely served our country and returned home with life-altering hearing injuries,” attorneys for the plaintiffs have said.
The 3M group urged Aearo’s bankruptcy declaration to try to limit its liability, but the judge in charge of the case rejected that the compensation be limited to the subsidiary on the grounds that it was part of a larger conglomerate.
Now, Aearo and 3M are trying to offset a portion of the settlement payments through their insurance companies. Aearo started a lawsuit against its insurers in June for this.
Last June, 3M reached an out-of-court agreement to pay up to 12.5 billion dollars for the contamination of water with its perfluoroalkyls (PFAS), a group of chemical agents that do not degrade and can accumulate over time, with harmful effects. for human health. That first agreement caused the company to close the first half of the year with losses of 5,865 million dollars. Predictably, with the new agreement it will also have red numbers in the third quarter and throughout the year, despite the fact that the company’s operating performance is good.
“The strength and stability of 3M’s business model and strong free cash flow capabilities, coupled with proven access to capital markets, provide financial flexibility to deploy capital to meet its cash flow needs in by virtue of this agreement and other commitments and obligations”, the company said on Tuesday, which explained the agreement in a conference with analysts and investors.
3M has insisted that the settlement is not an admission of liability. “The products at issue in this litigation are safe and effective when used correctly. 3M is willing to continue to defend itself in litigation if certain conditions agreed to in the settlement are not met,” he stated.
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