MSA Safety divests from its subsidiary holding legacy liabilities

MSA Safety has divested a wholly owned subsidiary that holds legacy product liability claims relating to coal dust, asbestos, silica, and other exposures, to a joint venture between R&Q Insurance Holdings and Obra Capital. In connection with the closing, MSA Safety contributed $341M in cash and cash equivalents, while R&Q and Obra contributed an additional $35M. As a result of the transaction, MSA Safety has removed all legacy cumulative trauma product liability reserves, related insurance assets, and associated deferred tax assets of the divested subsidiary from its balance sheet. R&Q and Obra have assumed management of the divested subsidiary, including the management of its claims. The divestiture reduces MSA Safety’s risk profile, as claims were subject to inherent risks and uncertainties. MSA Safety sold 100% of the equity of the divested subsidiary to a joint venture between R&Q and Obra. In connection with the closing, the parties contributed a total of $376M in cash and cash equivalents. MSA Safety contributed $341M, and the joint venture contributed an additional $35M. MSA Safety financed its contribution through available cash and borrowings, including a new $250M term loan facility. Pro forma for the transaction as of September 30, 2022, MSA Safety’s Net Debt to Adjusted EBITDA is 2.4x. The transaction closed on January 5, 2023. MSA Safety expects the transaction to be recognized in its 1Q23 results.