Owens Corning in Deal to Settle Asbestos Claims

PITTSBURGH —  Building products maker Owens Corning will pay more than $5 billion to asbestos claimants and as much as $2.27 billion to holders of bank debt as part of a plan to exit federal bankruptcy protection, a company lawyer told a Bankruptcy Court on Wednesday.

The asbestos claimants, creditors and other parties agreed to the plan that would see Owens Corning emerge from more than five years of bankruptcy protection this fall, attorney Norman Pernick said.

The plan would shift $7 billion in asbestos liabilities off the books of Owens Corning and into a trust that would be established for the plaintiffs.

Owens Corning would pay cash and shares worth more than $5.2 billion into the trust, making it one of the biggest asbestos settlements in U.S. history, said John D. Cooney, whose Chicago law firm, Cooney & Conway, represents the asbestos plaintiffs.

After the plan is approved, “we’re asbestos-free,” Pernick said.

The plan, which has an effective date of Oct. 30, would enable the company to exit bankruptcy with a value of $5.86 billion. Existing equity would be wiped out and 131.4 million shares of new stock would be issued.

Shareholders would be given warrants allowing them to buy 5% of the company at $45.25 per share for seven years.

The Toledo, Ohio-based company sought Chapter 11 bankruptcy protection in 2000 in an effort to shield itself from claims for billions of dollars in damages linked to health-endangering asbestos products it made decades ago.