Avondale Settles With Insurance Company for Train Wreck Damages

May 25, 2006

Just one day after announcing it would close or sell all its plants in Alabama and two other states, Avondale Mills Inc. said it has reached a $215 million settlement with its insurance company for damages caused by a train derailment and fatal chemical spill in Graniteville, S.C.

The Monroe, Ga.-based textile manufacturer said Tuesday it already has been paid $115 million by Rhode Island-based Factory Mutual Insurance Co. in connection with the January 2005 accident in which a Norfolk Southern train ran into parked rail cars, derailing them and releasing a toxic cloud of chlorine gas.

Nine people were killed in the spill, hundreds were hospitalized and thousands were evacuated from a one-mile radius around the accident site.

The company said the remaining $100 million of the settlement was to be paid by Thursday.

“We do not believe that the settlement fully compensates us for the full value of the losses incurred as a result of the Norfolk Southern derailment,” company Chairman G. Stephen Felker said in a news release.

Felker said the company intends to pursue a lawsuit or seek a settlement against Norfolk Southern.

In announcing its plan Monday to close its operations in July, Avondale blamed the train wreck for its decision.

“We were prepared to weather the storm of global competition,” Stephen Felker Jr., Avondale’s manager of corporate development, said Monday. “What we weren’t prepared for was an event such as this derailment, which was completely beyond our control.”

The company employs 5,000 people in Alabama, Georgia and South Carolina. About half those work in plants in Augusta, Ga., and Graniteville near the state line.

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