Pittsburgh Corning's modified third plan confirmed on interim basis

By Caroline Salls

Pittsburgh, May 17 - Pittsburgh Corning Corp.'s modified third amended plan of reorganization was confirmed on an interim basis on Thursday by the U.S. Bankruptcy Court for the Western District of Pennsylvania, according to an 8-K filed Friday with the Securities and Exchange Commission by 50% shareholder Corning Corp.

Before issuing a final order confirming the amended plan, the court will review motions for reconsideration, which must be submitted by May 21 and will be heard on May 23.

Corning payments

Under the amended plan, all current and future personal injury claims against Corning related to exposure to asbestos-containing products manufactured, distributed or sold by Pittsburgh Corning will be channeled to a trust for resolution.

Corning said the amended plan requires it to make payments to the trust after the plan takes effect and specified conditions are met.

These will include one payment of $70 million one year from the funding effective date, three additional payments of $50 million on the third, fifth and sixth subsequent anniversaries of the funding effective date and two additional payments of $35 million on the second and fourth subsequent anniversaries of the funding effective date, the final payment of which is subject to reduction based on the application of credits.

Corning said it would have the option to use its shares rather than cash to make these payments, but the liability would be fixed by dollar value and not the number of shares.

Additionally, Corning would contribute its equity interests in Pittsburgh Corning Corp. and Pittsburgh Corning Europe NV.

Corning's liability under the amended plan was estimated to be $524 million as of April 30.

Corning said it relinquished its claim for reimbursement of its payments and contributions under the amended plan from the insurance carriers involved in the bankruptcy proceeding, with some exceptions.

PPG obligation

Pittsburgh Corning's other 50% shareholder, PPG Industries, Inc., said in a news release that all current and future personal injury claims against PPG related to exposure to asbestos-containing products manufactured, distributed or sold by Pittsburgh Corning will also be channeled to a trust for resolution.

The plan requires PPG and its participating insurers to make their initial trust payments 30 business days after the plan takes effect and all conditions to funding have been met.

Under the PPG settlement arrangement, PPG's obligation to the trust consists of $825 million in cash payments to be made according to a fixed payment schedule over a period ending in 2023, about 1.4 million shares of PPG stock or cash equivalent and the surrender of its shares in Pittsburgh Corning and Pittsburgh Corning Europe.

At March 31, PPG's accrued liability related to the settlement arrangement, including the pre-tax present value of the cash payments, totaled about $800 million of which $550 million was the current portion.

In addition to PPG's obligation to the trust, the company said its participating historical insurance carriers will make $1.7 billion in cash payments to the trust through a series of payments ending in 2027.

Creditor treatment

Treatment of creditors under the plan will include the following:

• Priority tax claims and other priority claims will be paid in full in cash;

• Debtor-in-possession facility claims will be paid in full in cash from exit financing proceeds;

• The reorganized company will assume all retiree health and life insurance benefit plan obligations;

• All retirees and other participants in salaried and hourly pension plans will receive 100% of the benefits earned through the termination dates of those plans;

• Holders of general unsecured non-asbestos claims will recover 90% if they voted to accept the plan and will receive an initial payment percentage of the allowed amount of their claims if they voted to reject it;

• Workers compensation claims will be paid in full from applicable insurance proceeds; and

• Equity interests will be surrendered and cancelled, and equityholders will receive benefits provided by the asbestos permanent channeling injunction.

Pittsburgh-based Pittsburgh Corning is a global supplier of paints, coatings, chemicals, optical products, specialty materials, glass and fiberglass. Pittsburgh Corning filed for bankruptcy on April 16, 2000. Its Chapter 11 case number is 00-22876.

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