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 yesterday.
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.
Essentially, the plan shifts the $7 billion in asbestos liabilities off the books of Owens Corning and into a trust that will be established for the plaintiffs.
Owens Corning will pay cash and shares worth more than $5.2 billion into the trust, making it one of the biggest asbestos settlements in US 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, according to a settlement sheet obtained by the AP. Existing equity would be wiped out and 131.4 million shares of new stock will be issued.
Shareholders would be allowed to buy 5 percent of the company at $45.25 per share for seven years.
The company, based in Toledo, Ohio, 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.