Oct 5, 2000 - 10:21 AM

Owens Corning Files for Bankruptcy Protection

The Associated Press

TOLEDO, Ohio (AP) - Owens Corning filed for protection from creditors under the federal bankruptcy laws Thursday to help it cope with asbestos-related lawsuits that have cost the company $3.1 billion.

The supplier of building and industrial materials estimated in July it faced another $3 billion in asbestos payouts even though it stopped selling asbestos products more than 25 years ago.

The voluntary Chapter 11 filing in Wilmington, Del., would allow the company to develop a plan of reorganization that would resolve its asbestos liabilities while allowing it to continue operating its businesses, the company said in a news release.

Asbestos, which can cause health problems when inhaled, is a white flaky substance widely used during the 1940s and 1950s for insulation and in shipbuilding and in power plants. It has been known to cause lung cancer and asbestosis, a lung-scarring disease.

Toledo-based Owens Corning, probably most familiar for its Pink Panther mascot, has made payouts to 440,000 people who said asbestos made them ill.

Glen H. Hiner, chairman and chief executive officer, said the company had made progress toward settling asbestos claims through a national settlement program and thought a bankruptcy protection filing could be avoided.

However, the cost of resolving claims, combined with new legal filings, "led us to the conclusion that a Chapter 11 reorganization was prudent and necessary," he said.

The company's filing follows a path taken by at least 25 companies that once made asbestos.

Pittsburgh Corning Corp. in April reorganized with U.S. Bankruptcy Court protection because it faced 140,000 asbestos exposure claims. Babcock & Wilcox Co. in February did so to resolve about 45,000 claims pending against it.

Johns Manville Corp. sought protection bankruptcy protection in 1982 when it was faced with suits from people sickened by asbestos. It emerged from bankruptcy protection in 1988.

Despite the mounting claims against Owens Corning, the company as recently as July promised it would stay the course and continue payments to people who suffered asbestos-related illnesses.

However, during recent months the company's stock has dropped below $3 per share from a high of $41 per share in May 1999 and it was dropped from Standard & Poor's 500 index on Sept. 30.

Asbestos payments this year will reach $600 million - more than Owens Corning expects to get in sales from its building products.

Owens Corning stopped selling products containing asbestos in 1972. The company has taken hundreds of millions of dollars in charges against its earnings in recent years to absorb the cost of asbestos litigation, including a $542 million charge in 1996.

Nearly two years ago, it announced an agreement to pay $1.2 billion to settle most of its asbestos lawsuits. The company said the settlement wiped away 176,000 cases and put it within sight of freeing itself from the cost of the lawsuits.

But the settlement did stop new lawsuits from being filed.

Owens Corning is trying to recoup some of the money it has paid through pending lawsuits filed against every major tobacco company in the United States. Owens Corning has maintained that smokers exposed to asbestos have a higher risk of developing diseases than nonsmokers exposed to the material.

The company employs 20,000 people worldwide

http://ap.tbo.com/ap/breaking/MGAD20WIYDC.html

-- Carl Jenkins (Somewherepress@aol.com), October 05, 2000