Owens Corning reevaluating lease options after bondholders file proof of claim

By Carlise Newman

Chicago, March 21 - Owens Corning said Friday that it is evaluating its lease obligations for its world headquarters facility in Toledo, Ohio, after bondholders filed a proof of claim against the company. Owens Corning maintains that its payments on the lease - which support the bonds - are above market rates.

The trustee representing holders of Owens Corning's 9.90% secured lease bonds due May 15, 2015 filed the proof of claim. The bonds, which were issued by the Toledo-Lucas County Port Authority, were used to finance the construction of the facility. Owens Corning's lease payments are used to make payments due on these bonds.

The company has been in settlement negotiations with the bondholders in an attempt to reduce its payment obligations for the headquarters to a level that it believes is consistent with current real estate market conditions. The discussions continue but no agreement has been reached.

As part of its evaluation process, the company has obtained proposals for alternative spaces in the Toledo area.

"Owens Corning has been engaged in a company-wide review of its real estate facilities and related obligations since filing for Chapter 11 protection," said Jim Eckert, Owens Corning's director of real estate and facilities. "Because our world headquarters is our single largest lease obligation, it needs to be included in that review. Unless we are able to reach agreement encompassing 100 percent of the outstanding bonds, it is unlikely that we will be able to attain the financial results necessary to remain in our world headquarters facility."

Owens Corning filed for Chapter 11 protection in 2000 due to mounting asbestos liability. The company has the ability to either assume or reject the lease in connection with its current Chapter 11 proceedings.

Owens Corning is a Toledo, Ohio-based building materials systems manufacturer.

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