Owens Corning seeks OK of waiver letter to exit bankruptcy by Oct. 31

By Caroline Salls

Pittsburgh, Oct. 20 - Owens Corning requested court approval to enter into a waiver letter with J.P. Morgan Securities Inc. that would allow Owens Corning to close its equity commitment agreement and allow its plan of reorganization to become effective by Oct. 31, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, a key condition to the plan becoming effective is the consummation of the transactions under the equity commitment letter, particularly J.P. Morgan's $2.1 billion purchase of 70 million shares of new common stock in reorganized Owens Corning.

However, the equity commitment agreement requires the plan confirmation order to be final, and J.P. Morgan can terminate the equity agreement on Oct. 31 unless Owens Corning pays a $30 million extension fee.

On Oct. 6, debenture holder Joel Ackerman filed a request for reconsideration of the conclusions of law confirming the plan, which was dismissed by the bankruptcy court and denied by the district court.

Despite the dismissal and denial of Ackerman's motion for reconsideration, Owens Corning said an argument can be made that, as a result of Ackerman's motion, the confirmation order may not be final by Oct. 31.

Owens Corning said approval of the waiver letter will allow it to "move one step closer to effectuating the plan, and will prevent the recalcitrance of a lone dissenter from possibly overriding the will of billions of dollars of stakeholders who overwhelmingly approved the plan."

Under the waiver letter, Owens Corning has agreed to pay J.P. Morgan $15 million in return for a waiver of the requirement that the confirmation order must be final before the plan can take effect.

Owens Corning said if the waiver letter is approved, it will save $15 million of the $30 million that it would otherwise be required to pay to J.P. Morgan to extend the plan effective date to Dec. 15, and it would allow the company to begin distributions to creditors by Oct. 31.

Owens Corning said approval of the waiver letter would also cut off the accrual of post-bankruptcy interest to creditors, more than $700,000 a day in post-bankruptcy interest owed to bank debt creditors and other costs of administration.

A hearing is scheduled for Oct. 23.

Owens Corning, a Toledo, Ohio, building materials company, filed for bankruptcy on Oct. 5, 2000. Its Chapter 11 case number is 00-3837.

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