Sulzer included in settlement agreement
Sulzer Ltd has agreed to participate in a tentative settlement agreement between Sulzer Medica and plaintiffs lawyers by contributing USD 50 million to avoid any residual risks in connection with hip and knee implant recalls in the USA.
In addition to this sum, Sulzer is also making its remaining 480,000 Sulzer Medica shares available for settlement purposes. This satisfactory solution for all concerned enables Sulzer to concentrate fully again on its realigned corporate business operations.
This tentative settlement, reached between the parties over the last few days in Cleveland with the assistance of Judge Kathleen M. O’Malley, provides for payments totalling around USD 1 billion. With Sulzer Ltd. participation in the settlement Judge O’Malley has reinstated with immediate effect the injunction of all claims against Sulzer Ltd. This injunction for all parties is extended to February 22, 2002, to give the parties an opportunity to enter into a final settlement agreement.
The approval for this settlement agreement will come before Judge O’Malley on May 6, 2002 at the fairness hearing. This negotiated settlement is a good solution, since it ensures the equitable treatment of all patients. Although the parties expect that the vast majority of plaintiffs will accept the settlement, Sulzer Medica has agreed to honour its obligation according to the separation contract with Sulzer Ltd to accept any remaining risks in the litigation. Sulzer Ltd is thus freed of all risks with regard to possible opt-outs.
As said before, Sulzer accepts no legal or moral responsibility for the alleged faulty manufacturing of hip and knee implants by Sulzer Orthopedics Inc. In order to eliminate the residual risks inherent in the US litigation, however, Sulzer nevertheless decided to participate in this settlement agreement. This represents the fastest way of establishing security and clarity for all Sulzer stakeholders: employees, customers and shareholders. According to Sulzer CEO Fred Kindle: "It is important for us to concentrate fully again on our business operations and shape our own future actively. I am very glad that by reaching this settlement agreement, we can close the case satisfactorily and avoid further years of litigation. We prefer to spend our time on our customers and markets rather than in court."
The costs incurred by this settlement agreement will be charged to the 2001 accounts. Despite this temporary setback, the Sulzer Corporation has good prospects for a profitable future. With corporate restructuring practically complete, Sulzer is very well positioned with four promising core businesses and the high-potential Sulzer Hexis new venture division.