AKRON (Dec. 13, 2000) — Before all is said and done, Bridgestone/Firestone Inc. could end up with a bill of $2.7 billion or more to complete its Firestone ATX, ATX II and Wilderness AT recall and settle the myriad of U.S. lawsuits against it relating to the recalled tires, according to an equity research firm´s analysis of the situation.
UBS Warburg L.L.C., in a 48-page report on the Firestone situation, estimated Bridgestone/Firestone faces potential damages of between $785 million and $2.73 billion in costs to settle the dozens of lawsuits pending against it, complete the recall and pay any regulatory fines that may be levied.
UBS Warburg based its estimates on known automotive-related settlement data, including formulae from the Civil Litigation Research Project, which take into account the mitigating effect on awards the appeals process often has. The damage estimate range depends on a variety of factors, including to what extent Ford Motor Co. might be held accountable in the cases involving Ford vehicles.
Offsetting the costs of settling litigation and completing the recall would be $100 million in product liability coverage Bridgestone/Firestone told UBS Warburg it carries.
Warburg´s calculations do not take into account Bridgestone/Firestone´s potential liability in other countries, most notably Venezuela and Saudi Arabia, where the company has been implicated in more than 50 deaths.
Warburg´s estimates were made in October, before the National Highway Traffic Safety Administration updated the fatality count attributed to Firestone. The latest count, issued Dec. 6, raised the toll to 148, up from 119.
Separately, Bridgestone Corp. said it would take a $450 million charge against 2000 earnings to cover litigation costs.