Federal-Mogul plan proponents seek approval of $4.8 million settlement with Owens-Illinois

By Caroline Salls

Pittsburgh, Oct. 14 - Federal-Mogul Corp.'s plan of reorganization proponents requested approval of a $4.8 million settlement agreement with Owens-Illinois, Inc., according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

Under the agreement, on the effective date of Federal-Mogul's plan of reorganization, the company would pay Owens-Illinois $4.8 million in cash in satisfaction of its claims.

In addition to agreeing that the payment satisfies all of its claims against Federal-Mogul, Owens-Illinois said it would withdraw its preliminary objection to the plan, and support and vote to accept any Federal-Mogul plan.

Also, Owens-Illinois agreed to refrain from supporting or voting in favor of any competing plan while any Federal-Mogul plan is pending.

According to the motion, the agreement resolves $10 million in Owens-Illinois claims against Federal-Mogul and lets the company avoid extensive potential litigation in connection with the claims.

Owens-Illinois' claims are part of a $1.6 billion complaint it filed in 1999 against a Federal-Mogul subsidiary, saying that the company hid information on the hazards of asbestos to asbestos-products users.

Owens-Illinois said, had it known about these hazards, it never would have entered the asbestos business.

The $1.6 billion claim was cut down to $10 million as part of a May 2000 settlement agreement.

Federal-Mogul's plan proponents include the company, its official committee of unsecured creditors, the official asbestos claimants committee, the legal representative for the future asbestos claimants, the official committee of equity security holders and the agent for the company's pre-bankruptcy bank lenders.

Federal-Mogul, a Southfield, Mich.-based auto parts manufacturer, filed for bankruptcy on Oct. 1, 2001. Its Chapter 11 case number is 01-10578.

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