Workers were on strike for nine weeks

The arrangement could see control of the Welsh company cross the Atlantic.

All charges against Mr Smith, who fired 87 workers in July after they went on strike over pay, have now been dropped.

The terms of the settlement in Connecticut's District Court have not been released because the judge has sealed the document.

Multi-million payout

But court documents from earlier in the year suggested Mr Smith could have to pay Ferotec Limited, the parent company, $5m to $7m.

The company had claimed he fraudulently transferred the money from the Raymark division to buy Friction Dynamics in Caernarfon.

The Transport and General Workers Union's Bill Morris condemned the company

It was claimed he embarked on an "elaborate scheme" to deploy a "systematic stripping of assets," resulting in a loss of $20m from Raymark.

He was trying to dodge the asbestos creditors and buy the Welsh company, it was alleged, pocketing $12m for his family.

Mr Smith bought Friction Dynamics in 1997 but, this year, the Transport and General Workers Union claimed there had been no union meeting allowed and no pay rises at the site during his reign.

The workers went on strike but were sacked by the owner several weeks later.

Government cash

Raymark has now gone bankrupt, but spin-off Raytech is still facing billion-dollar claims from individuals who claim to have developed cancer using their asbestos products.

Both the state and federal governments in the US are also trying to take $200m from Mr Smith to defray the cost of an environmental waste clean-up at the old factory in Stratford, Connecticut.

It is not clear whether the businessman will retain control of Friction Dynamics, but previous court papers had speculated the company could now be turned over to Raytech.

That company, however, could find its bankruptcy case resolved soon, given the settlement.

Mr Smith's lawyer did not make a comment.