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

By Jennifer Lanning Drey

Portland, Ore., Oct. 23 - Owens Corning obtained court approval of a waiver letter with J.P. Morgan Securities Inc. that will allow the company to close its equity commitment agreement and allow its plan of reorganization to become effective by Oct. 31, according to company spokesperson Jason Saragian.

"The success today is that it eliminates any uncertainty that we will have emerged by the end of October of this year," Saragian said on Monday.

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

In its motion requesting the approval, Owens Corning said that the waiver letter would save $15 million of the $30 million that it would otherwise be required to pay to J.P. Morgan Securities to extend the plan effective date to Dec. 15 and that it would allow the company to begin distributions to creditors by Oct. 31.

Previously, the company also said that an approval would 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 key condition to Owens Corning's plan becoming effective is the consummation of the transactions under the equity commitment letter, particularly J.P. Morgan Securities' $2.1 billion purchase of 70 million shares of the reorganized Owens Corning's new common stock.

However, the equity commitment agreement required the plan confirmation order to be final, and J.P. Morgan Securities could terminate the equity agreement on Oct. 31 unless Owens Corning paid 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, 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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