Quigley parent to increase asbestos trust contribution in fifth plan

By Caroline Salls

Pittsburgh, June 4 - Quigley Co. Inc. parent Pfizer Inc. has increased its contribution to an asbestos trust as part of the company's fifth amended and restated plan of reorganization, according to a June 4 filing with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, according to the amended disclosure statement, Pfizer has significantly increased the total value of its contribution to the asbestos personal injury trust in the form of additional cash, enhanced insurance assets, income-generating cash-flow-positive commercial property and a waiver of its secured and unsecured claims against Quigley.

The company said Pfizer has agreed to waive a $95 million secured claim, a $19 million debtor-in-possession financing claim and more than $33 million in unsecured claims.

As under the previous version of the plan, Pfizer has agreed to transfer its Quigley stock to the asbestos PI trust on the plan effective date.

In addition to the contribution of its entire interest in non-AIG insurance it shares with Quigley, Pfizer is also contributing all amounts paid and to be paid by the AIG Cos. under a 2004 $405 million settlement agreement and all income earned on that amount.

Under the fourth amended plan, Quigley was to relinquish and assign to Pfizer all payments from the AIG Cos. in exchange for a 40-year annuity from Pfizer.

However, the company said Pfizer's new AIG-related contribution under the plan now includes not only all of the proceeds from the shared AIG insurance but also roughly $81 million in payments under AIG policies that otherwise would have been paid directly to Pfizer and in which Quigley would not otherwise have an interest.

According to the amended disclosure statement, Pfizer's increased contribution to the asbestos PI trust enables current claimants who have not otherwise released their Quigley-derivative claims against Pfizer and all future demand holders to receive a distribution projected to be 30.5% of their liquidated claim value for their Quigley claims and their release of Pfizer's derivative liability.

Quigley said this increased distribution addresses some of the rulings made in the bankruptcy court's September 2010 plan confirmation decision and provides that asbestos claimants are not compelled to surrender their derivative claims against Pfizer without appropriate compensation.

Other changes

Other plan changes include the following:

• To ensure that the plan is feasible, Pfizer has acquired commercial real estate valued at more than $43 million that it will contribute or otherwise transfer to reorganized Quigley on or before the plan effective date.

Quigley said the real estate has produced $1.9 million of positive cash flow in the first year and will produce increased income in following years because of a rent escalation clause in the long-term lease.

Therefore, the real estate is expected to generate income for the foreseeable future and provide both a highly valuable asset and a continuing revenue stream for the benefit of the asbestos PI trust and all current and future asbestos claimants and demand holders;

• Pfizer has agreed with Quigley's board of directors to expand the number of directors on Quigley's board to five. As a result, Quigley appointed two new independent directors, ensuring the board's continuing independence; and

• To ensure that the plan is feasible, Pfizer has agreed to acquire and contribute to reorganized Quigley commercial real estate that it will operate following the plan effective date.

This commercial real estate will generate income for the foreseeable future and will also provide an ongoing source of income for the benefit of the asbestos PI trust and the claimants, the disclosure statement said.

Quigley, a unit of New York-based Pfizer Inc., filed for bankruptcy on Sept. 3, 2004. Its Chapter 11 case number is 04-15739.

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