Washington, DC, June 21-- Shares of two companies battling asbestos lawsuits climbed on Friday on hopes that lawmakers are reviving legislation to create a national trust fund for asbestos liabilities.
Shares of McDermott International Inc. were up 6 percent, at $9.71, in late Friday trade on the New York Stock Exchange. Shares of W.R. Grace and Co. climbed more than 6 percent, to $5.57, in late trade on NYSE.
Many companies facing asbestos claims have filed for bankruptcy; among those that have done so in recent years are building materials company Owens Corning and auto parts supplier Federal-Mogul Corp.
Earlier this week, U.S. Senate Democratic leader Tom Daschle said there was still time this year to establish a national fund to pay asbestos victims' claims. He and Senate Republican Leader Bill Frist were still seeking a bipartisan consensus, he said.
Wall Street analysts said Daschle's statement struck an upbeat note after the effort appeared to have stalled last month.
"Although we would ascribe a 10 percent probability of the asbestos legislation being enacted this year, a 'meeting of the minds' seems to be emerging between the opposing parties," said analyst Prabhas Panigrahi, who follows McDermott for institutional research firm EKN Inc. in New York.
Panigrahi saw a 50 percent to 60 percent probability of a national asbestos fund by early 2005.
If that happens, McDermott should reap a "windfall gain" of $5 a share, he said.
Asbestos was widely used for fireproofing and insulation until the 1970s. Scientists say inhaled fibers are linked to cancer and other diseases.
Companies have paid an estimated $70 billion on about 730,000 asbestos personal injury claims, making it the most expensive type of litigation in U.S. history, according to the RAND Institute for Civil Justice.
Other analysts agreed that the news out of Washington had bolstered the price of stocks hurt by asbestos concerns.
"There has been positive momentum. There are some meetings talking place in Washington and it keeps alive the prospect of something happening," said Crystal Mingione, an analyst with Susquehanna Financial Group, an independent research firm for institutional investors.
