In one of the largest ever US asbestos settlements, building products maker Owens Corning will pay more than USD 5 billion (EUR 3.94 billion) to asbestos claimants and up to USD 2.27 billion (EUR 1.79…
In one of the largest ever US asbestos settlements, building products maker Owens Corning will pay more than USD 5 billion (EUR 3.94 billion) to asbestos claimants and up to USD 2.27 billion (EUR 1.79 billion) to holders of bank debt as part of a plan to emerge from Chapter 11 bankruptcy protection. Asbestos claimants, creditors and other parties agreed to the plan that would see Owens Corning emerge from bankruptcy protection after more than five years in autumn 2006, company lawyer Norman Pernick told a bankruptcy court on 10 May 2006. The plan creates a trust for plaintiffs which will assume USD 7 billion (EUR 5.51 billion) in asbestos liabilities from Owens Corning. Owens Corning will pay cash and shares worth more than USD 5.2 billion (EUR 4.1 billion) into the trust, said John D. Cooney, whose Chicago law firm, Cooney & Conway, represents the asbestos plaintiffs. Following approval of the plan, Owens Corning becomes “asbestos-free”, in the words of Mr. Pernick. The plan, which has an effective date of 30 October 2006, would enable the company to leave bankruptcy with a value of USD 5.86 billion (EUR 4.62 billion), according to a settlement sheet filed with the court. Existing equity would be cancelled and 131.4 million new shares will be issued. Shareholders would be given warrants allowing them to buy 5% of the company at USD 45.25 per share for seven years. The Toledo, Ohio-based company sought Chapter 11 bankruptcy protection on 5 October 2000 in an effort to protect itself from claims for damages amounting to billions of dollars linked to asbestos products it made decades before. The plan, filed in December 2006, follows years of litigation between attorneys for asbestos claimants, owners of the company“s bank debt and others. The US Supreme Court recently refused to hear an appeal of another plan that would have consolidated the company“s assets. Disputes between creditors sank earlier reorganization proposals. If approved by the court and creditors, the new plan could mean a windfall for hedge funds that own most of Owens Corning“s bank debt. Under the proposal, holders of about USD 1.5 billion (EUR 1.18 billion) in bank debt would be paid as much as USD 2.27 billion (EUR 1.79 billion) in cash, including interest. Bankruptcy court Judge Judith K. Fitzgerald scheduled a hearing for 10 July 2006 to review a disclosure statement on the plan. The proposal would then go to creditors for a vote before a confirmation hearing on 18 September 2006. Owens Corning has agreed to pay USD 4.29 billion (EUR 3.38 billion) in cash into a trust for asbestos claimants, plus 28.6 million shares of equity in the reorganized company. “Although nothing can ever repair the loss of lives that has occurred, today“s settlement represents a fair resolution for both the victims and Owens Corning”, Cooney said in a statement. Anthony L. Gray, for the shareholders, said he and his clients were pleased with the accord. “We think that it“s a very good result for the holders of the preferred securities and the equity security holders”, he said. “This was a major step forward for us”.