SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 23, 1997
TRANSTECH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-6512 22-1777533
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
200 Centennial Ave., Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)
(732) 981-0777
(Registrant's telephone number, including area code)
Former name or former address, if changed
since last report Not applicable
Page 1 of 6 pages
ITEM 5. Other Events
On December 23, 1997, Transtech Industries, Inc. ("Transtech")
and certain of its wholly-owned subsidiaries (Transtech and its
subsidiaries referred herein as the "Company") entered into four
agreements which settled lawsuits relating to the remediation of
the Kin-Buc Landfill, an Edison, New Jersey Superfund site which
the Company owned and operated. Set forth below is a review of
developments in such lawsuits and the terms of the settlement
agreements affecting the Company.
Background
In February 1979, the Environmental Protection Agency brought
suit in the United States District Court for the District of New
Jersey against Transtech, its subsidiaries Kin-Buc, Inc. ("Kin-
Buc") and Filcrest Realty, Inc. ("Filcrest"), certain former
officers, directors and shareholders of Transtech, and Inmar
Associates, Inc. ("Inmar"), a corporation controlled by Marvin H.
Mahan ("Mahan"), a former officer, director and principal
shareholder of the Company, in connection with the ownership and
operation of the Kin-Buc Landfill (the "Landfill"). This suit was
placed on administrative hold by the Court because the Company and
SCA Services, Inc. ("SCA"), an affiliate of Waste Management, Inc.
(formerly known as WMX Technologies, Inc.) ("WMI") agreed to
undertake the remediation of the Landfill.
In 1986, Transtech sold the stock of its subsidiary Wastequid,
Inc. to SCA, and, simultaneously therewith, Transtech, Kin-Buc,
Filcrest and Inmar (the "Transtech Group") entered into an
agreement (the "1986 Agreement") with SCA, its wholly-owned
subsidiary Chemical Waste Management of New Jersey, Inc. ("CWMNJ"),
Wastequid, Inc. and Earthline Company (the "SCA Group") regarding
the sharing of the costs of remediating the Landfill, pursuant to
which the Transtech Group agreed to pay 75% of such costs and the
SCA Group the remaining 25% (the "Sharing Formula").
In 1990, Transtech, Kin-Buc and Filcrest commenced a suit in
the United States District Court for the District of New Jersey
entitled Transtech Industries, Inc. et al. v. A&Z Septic Clean et
al. against generators and transporters of hazardous waste disposed
of at the Landfill (the "PRPs") for contribution towards the cost
of remediating the Landfill. In 1991, 1992 and 1993, the
Transtech Group, the SCA Group and WMI presented settlement
proposals to the PRPs believed to be responsible, individually, for
no more than 1% of the non-municipal waste disposed of at the
Landfill (the "De Minimis PRPs"). These settlements resulting in
a contribution by certain De Minimis PRPs of approximately $10
million towards the cost of remediating the Landfill. From 1993,
the litigation proceeded against the non-settling De Minimis and
non-De Minimis PRPs, who were believed to have been responsible, in
the aggregate, for approximately 90% of the non-municipal waste
disposed of at the Landfill, and in 1995, generators and
transporters of municipal hazardous waste disposed of at the
Landfill were joined in the litigation. After 1995 and continuing
through 1997, the SCA Group and WMI entered into settlements with
other non-municipal waste PRPs without the participation of the
Transtech Group. These settlements resulted in substantial
additional contributions towards the cost of remediation.
Discovery and other pre-trial proceedings had taken place and a
trial date had been tentatively set as settlement discussions among
the Transtech Group, the SCA Group and WMI, on the one hand, and
among a large group of non-municipal waste PRPs ("the AFP Group"),
the SCA Group and WMI, on the other, were taking place.
In 1992, substantially all of the non-municipal waste PRPs,
including substantially all of the AFP Group, filed two pleadings
in the litigation involving the Company. The first was a
counterclaim against Transtech, Kin-Buc and Filcrest and a third-
party complaint against other owners or operators of the Landfill,
including, among others, Inmar, a wholly-owned subsidiary of Inmar,
Dock Watch Quarry Pit, Inc. ("Dock Watch"), Mahan, a former officer
and director of both Transtech and Inmar, Robert J. Meagher
("Meagher"), the SCA Group, WMI and a former officer and director
of SCA, Anthony Gaess ("Gaess") (the "Owner-Operator
Counterclaim"). The second pleading involving the Company was a
counterclaim against Transtech and a third-party complaint against
parties to transactions with Transtech, including Inmar and Mahan,
which were alleged to have been fraudulent conveyances (the
"Fraudulent Conveyances Counterclaim"). In that pleading, the PRPs
sought to have the consideration paid by Transtech in the
conveyances returned and placed in the hands of a receiver.
Discovery on the issues presented in the Fraudulent Conveyances
Counterclaim and the Owner-Operator Counterclaim was proceeding,
and motions to join additional parties to the Fraudulent
Conveyances Counterclaim were pending at the time settlement
discussions between Transtech and the AFP Group were taking place.
In 1993, the Transtech Group served a demand for arbitration
(the "Transtech Arbitration") on the SCA Group and WMI seeking
either rescission of the 1986 Agreement or reformation of the
Sharing Formula. In response, the SCA Group and WMI brought an
action in the Supreme Court for the State of New York to enjoin the
Transtech Arbitration. Pending a decision by that Court, the
Transtech Arbitration was stayed. In 1995, during the stay, the
SCA Group filed a demand for arbitration (the "SCA Arbitration")
seeking reimbursement from the Transtech Group of 75% of
remediation expenses fully funded by the SCA Group to that point,
and the Transtech Group brought an action in the Supreme Court
for the State of New York to stay the SCA Arbitration pending a
decision on the motion to enjoin the Transtech Arbitration. On
motion brought by the SCA Group, the Court narrowed the issues to
be arbitrated in the SCA Arbitration and made any findings on such
issues subject to resolution of the issues in the Transtech
Arbitration. After discovery on these issues was completed, the
Transtech Group, the SCA Group and WMI agreed to postpone
proceedings in both the SCA Arbitration and the Transtech
Arbitration pending the outcome of settlement discussions.
The Settlements
On December 23, 1997, settlements of the litigation, including
claims for contribution towards to the cost of remediating the
Landfill, the Owner-Operator Counterclaim and the Fraudulent
Conveyance Counterclaim, and settlements of the Transtech
Arbitration, the SCA Arbitration and litigation relating thereto,
resulting from discussions among the Transtech Group, the SCA Group
and WMI, on the one hand, and among the AFP Group, the SCA Group
and WMI, on the other, were reached, and four agreements effecting
these settlements were executed and delivered.
The first of these four settlement agreements was among
Transtech, Kin-Buc, Filcrest, Mahan, Meagher, the SCA Group and the
AFP Group (consisting of all but 29 non-municipal waste PRPs). In
this agreement, among other things, all members of the AFP Group
released all their claims against Transtech, Kin-Buc, Filcrest,
Mahan, Meagher, Inmar and Dock Watch, among others, arising from or
relating to claims for contribution and the Owner-Operator
Counterclaim.
The second settlement agreement was among Transtech, Kin-Buc,
Filcrest, Mahan, Meagher, Inmar, Dock Watch, the SCA Group, WMI and
Gaess. In this agreement, among other things, the parties agreed
to terminate the 1986 Agreement and all the other agreements
between or among any of them relating to the Landfill, to dismiss
the Transtech Arbitration and the SCA Arbitration and the related
litigation, and to dismiss all their claims against the other
parties arising from or relating to the Landfill, including claims
for contribution and the Owner-Operator Counterclaim. Transtech,
Kin-Buc and Filcrest agreed to continue to prosecute their pending
suit against former excess insurance carriers and to pay SCA 75% of
the net recoveries of such suit, after allowances for related legal
fees and federal and state income tax obligations resulting from
the audit of the Company's income tax returns for the years 1982
through 1992, up to a maximum of $3.5 million. Transtech also
agreed to turn over the work products of its expert witness and its
attorney in the litigation to SCA, who will defend and indemnify
Transtech, Kin-Buc, Filcrest, Mahan, Meagher, Inmar and Dock Watch
from continuing claims by non-settling non-municipal waste and
municipal waste PRPs in the litigation.
The third settlement agreement was among the AFP Group and
certain other PRPs, Transtech, all the third-party defendants to
the Fraudulent Conveyances Counterclaim, and the other parties
sought to be joined in the Fraudulent Conveyances Counterclaim. In
this agreement, the AFP Group and the other settling PRPs dismissed
all their claims in the Fraudulent Conveyances Counterclaim in
exchange for a payment $1.5 million. Of this amount, $480,000 was
paid by Transtech and the balance was or will be paid by the third-
party defendants and such other parties.
The fourth settlement agreement was among the SCA Group, WMI,
Transtech, all the third-party defendants to the Fraudulent
Conveyances Counterclaim, and the other parties sought to be joined
in the Fraudulent Conveyances Counterclaim. In this agreement, the
SCA Group and WMI dismissed all their claims in the Fraudulent
Conveyances Counterclaim and agreed to defend and indemnify
Transtech, the third-party defendants and such other parties
against continuing claims by non-settling PRPs (consisting of a
group of four non-municipal waste PRPs). In addition, the third-
party defendants and such other parties released Transtech from all
liability to them arising from the settlement of the Fraudulent
Conveyances Counterclaim.
Accrued Remediation Liability and Expenses
The Company carries an accrued remediation liability of
approximately $10 million related to the Landfill, essentially all
of which will be reversed as a result of the settlements described
above. The Company will recognize income in an amount equal to the
reduction of such accrued remediation liability.
The substantial expense of the Company's prosecution and
defense of claims in the litigation (including the contribution
claim, the Owner-Operator Counterclaim and the Fraudulent
Conveyances Counterclaim), the prosecution of the Transtech
Arbitration, the defense of the SCA Arbitration, and the
prosecution and defense of the litigation related to the Transtech
Arbitration and the SCA Arbitration, as well as the substantial
expense of the Company's efforts in respect to the settlements
described above, which the Company has incurred through 1997, will
no longer be borne by the Company. There may be some continuing
expenses in respect of the Landfill, but not of the magnitude
experienced in the past.
Press Release
See the following press release dated December 24, 1997
announcing the closing of the above described settlements.
PISCATAWAY, N.J., December 24, 1997 - Robert V. Silva,
President and Chief Executive Officer of Transtech Industries,
Inc. (OTC BULLETIN BOARD:TRTI) announced today that on
December 23, 1997, Transtech reached settlement of lawsuits
relating to the remediation of the Kin-Buc Landfill, an
Edison, New Jersey Superfund site which a subsidiary of
Transtech owned and operated. Mr. Silva said the settlements
significantly reduce Transtech's liability resulting from
environmental pollution at the Kin-Buc site.
A settlement was reached with all but approximately 30
generators and transporters of waste disposed of at the Kin-
Buc Landfill, named as defendants in a lawsuit brought by
Transtech, pending in the United States District Court for the
District of New Jersey and entitled Transtech Industries, Inc.
et al. v. A&Z Septic Clean et al. A settlement was also
reached with Waste Management, Inc., named as a third-party
defendant in that suit.
Transtech has agreed to pay over to Waste Management a
maximum of $3.5 million of Transtech's recoveries on its
pending insurance claims relating to the Kin-Buc Landfill and
another site, the remediation of which was financed, in part,
by Transtech. In exchange, Transtech has been released by the
settling generators and transporters and Waste Management from
all liability to them in connection with operations at the
Kin-Buc Landfill.
In addition, on December 23, 1997, Transtech reached a
settlement of a counterclaim and third-party complaint in the
lawsuit identified above brought by some of the defendants
therein and Waste Management against Transtech and certain
individuals and entities who entered into specified
transactions with Transtech. Transtech has agreed to pay
$480,000 of a total $1.5 million payment to the settling
defendants, who, in exchange, released their counterclaim
against Transtech and their third-party complaint against such
individuals and entities. Such a payment will be made by year
end.
Transtech carries an accrued remediation liability of
approximately $10 million related to the Kin-Buc Landfill,
essentially all of which will be reversed as a result of the
settlements. Transtech will recognize income in an amount
equal to the reduction of such accrued remediation liability.
As reported in detail in its latest annual and quarterly
filings with the Securities and Exchange Commission, Transtech
faces continuing uncertainties stemming from audits of its
federal income tax returns and from its former waste handling
activities. Transtech continues to evaluate alternative
actions, including the sale of assets, to address its
projected tax and other obligations and its ongoing litigation
expenses in connection therewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRANSTECH INDUSTRIES, INC.
By:
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer and Secretary
Dated: December 31, 1997
