Owens Corning plan confirmation hearing Sept. 18; ballots, objections due Sept. 1

By Caroline Salls

Pittsburgh, July 12 - Owens Corning's plan of reorganization confirmation hearing will be held Sept. 18, and all votes on the plan must be received by Sept. 1, according to a company news release.

Ballots not received by Sept. 1 will not be counted, the release said. Asbestos personal injury or wrongful death claimants are entitled to vote on the plan.

According to the release, asbestos-related claimants can only assert their claims against the company's plan trusts and not directly against any of Owens Corning's debtors.

Objections to plan confirmation must also be filed with the U.S. Bankruptcy Court for the District of Delaware by Sept. 1.

The disclosure statement for the company's sixth amended plan was approved on Monday.

According to court documents, procedures for subscribing to the rights offering under the plan were also approved on Monday.

As previously reported, the plan calls for existing Owens Corning stock to be cancelled and for 131.40 million shares of new stock to be issued, resulting in $3.94 billion of total equity value at emergence from Chapter 11.

Plan creditor treatment

Also under the plan:

• Bank creditors will receive a full cash recovery, plus interest, amounting to $2.28 billion, calculated as of March 31. Interest will continue to accrue through the effective date.

• Non-bondholder senior and junior unsecured creditors will receive about $249 million in cash.

• Bondholders will receive equity, and asbestos claimants will receive cash and, if the FAIR Act does not become law, some equity.

• Bondholders with aggregate claims of $1.39 billion will receive 26.6 million shares of the reorganized company's common stock. In addition, bondholders and some other general unsecured creditors will have the right to purchase a pro rata share of 72.9 million shares of the reorganized company's common stock at $30 per share via an equity rights offering.

• Owens Corning and Fibreboard asbestos claimants collectively will receive $2.87 billion in cash. The cash will be deposited into a 524(g) trust fund. In addition, Owens Corning will assign all rights to any insurance recoveries to the trust.

• Owens Corning and Fibreboard asbestos claimants also will receive a contingent payment of $1.39 billion in cash and 28.6 million shares of the reorganized company's common stock.

The contingency payment will vest if the FAIR Act is not enacted within 10 days of the conclusion of the 109th Congress. If the FAIR Act is enacted within that timeframe, the contingent note will be cancelled and no further amounts will be transferred to the 524(g) trust.

• Holders of Owens Corning 6.5% Convertible Monthly Income Preferred Securities (MIPS) will receive warrants to purchase 10% of the fully diluted shares of the reorganized company, assuming exercise of all warrants but ignoring management options, at a strike price of $43 per share. The warrants can be exercised within seven years of the effective date.

• Existing holders of Owens Corning common stock will receive warrants to purchase 5% of the fully diluted shares of the reorganized company, assuming exercise of all warrants but ignoring management options, at a strike price of $45.25 per share. The warrants can be exercised within seven years of the effective date.

• In the event that the FAIR Act is enacted into law and the contingency payment to asbestos claimants is not made, existing Owens Corning shareholders and MIPS would have the right to exchange the aforementioned warrants for 14.75% and 5.5%, respectively, of the fully diluted shares of the reorganized company.

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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