$6.7bn settlement for asbestos victims
10 may 06
BUILDING products maker Owens Corning has agreed to a $5.2 billion settlement of long-running claims for illnesses linked to asbestos, the company and lawyers for plaintiffs said.
The deal is likely to be the biggest asbestos settlement in history, according to lawyers who represent plaintiffs.
Owens Corning confirmed the deal today, saying it “represents a significant milestone” that will allow the group to emerge from bankruptcy by the end of 2006.
The agreement calls for the Ohio-based company to make an initial cash payment of $2.9 billion in cash into a trust for asbestos victims. A further payment of $1.39 billion would be made later this year and 28.6 million shares of equity in the reorganised company would be included as well.
The value of these payments and equity totals in excess of $5.2 billion and would allow Owens Corning to emerge from bankruptcy without any liability for asbestos claims, the lawyer said.
“The path to justice for victims of asbestos cancer and asbestos poisoning by Owens Corning has been a long and difficult one. 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,” said a plaintiff’s lawyer.
“Although we are pleased with the outcome of this settlement, it is an appropriate time to remember that countless lives were lost or destroyed as a result of the needless use of asbestos containing products.”
Company officials said the plan is key to the bankruptcy reorganisation that will include the cancellation of existing stock and payments to bondholders and other creditors. They hope the plan will be approved before the end of 2006.
“We are extremely pleased to have achieved one of our long-standing objectives of developing a consensual reorganisation plan that deals fairly and equitably with all creditors and that fully resolves the company’s asbestos-related issues,” said Dave Brown, president and chief executive officer of the company.
Asbestos, a naturally occurring mineral, was used until the mid 1970s in a variety of products including fireproofing, insulation and car brakes, but was found to be a major cause of mesothelioma, a cancer of a membrane in the chest, and asbestosis, a progressive scarring of the lungs that can cause fatal breathing problems.