BorgWarner has divested BorgWarner Morse TEC LLC, a wholly-owned subsidiary of the company that holds asbestos and certain other liabilities, to Enstar Holdings LLC, a subsidiary of Enstar Group Ltd.
In connection with the closing, Auburn Hills-based BorgWarner contributed approximately $172 million in cash to Morse TEC.
"Enstar is a leading player in managing legacy liabilities and has specific expertise in asbestos," BorgWarner President and CEO Frédéric Lissalde said in a statement. "This reflects our company's strategy to eliminate or reduce exposure to legacy non-operating liabilities and to actively manage and deploy capital."
Enstar's team of experts will assume the operational management team of Morse TEC. This includes the management of all of Morse TEC's asbestos claims and collection of existing insurance policies.
As a result of the transaction, BorgWarner expects to remove the asbestos obligations, related insurance assets and associated deferred tax assets from the company's condensed consolidated balance sheet. The company is evaluating the accounting for this transaction, but currently estimates that this transaction could result in an after-tax loss in its consolidated financial statements of up to $40 million in the fourth quarter of 2019.
BorgWarner Inc. develops clean and efficient technology solutions for combustion, hybrid and electric vehicles. With manufacturing and technical facilities in 67 locations in 19 countries, the company employs approximately 30,000 worldwide.
