USG unsecured creditors ask for interest payments to resume

New York, April 11 - USG Corp.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Delaware to instruct the company to resume interest payments.

USG has enough cash to cover the cost of the interest and there is broad agreement that unsecured creditors should be paid in full but so far disputes over asbestos claims mean there is no reorganization plan, the unsecured creditors said in a filing Monday with the court.

USG, the personal injury asbestos claims committee and the representative for future asbestos claimants have all stated publicly the unsecured creditors will be paid in full in cash with interest, the creditors committee said.

"Yet due to impasses between the debtors, on the one hand, and the various asbestos constituencies on the other hand, over the size of the asbestos claimants' claim and which USG entity or entities are liable for such claim, a consensual plan of reorganization has not yet surfaced," the creditors' filing said.

"While this debate rages on - already for more than 3½ years - the non-asbestos general unsecured creditors are held hostage, receiving no distribution on their claims, with no end in sight."

The unsecured creditors want payment:

* By June 10 for interest due from Jan. 1 to March 31 on the principal amount of USG's pre-Chapter 11 bank debt plus interest due before Dec. 31, 2004, plus interest on the June 10 interest payment from April 1 to June 10, all interest to be at the regular rates for the loans;

* By June 10 for interest due from Jan. 1 to any interest payment date before June 10 on USG's senior notes and industrial revenue bonds on the principal amount plus interest due before Dec. 31, 2004, plus interest on the June 10 interest payment from April 1 to June 10, all interest to be at the regular rates; and;

* On July 31 for interest on all other undisputed non-asbestos unsecured debt from Jan. 1 to June 30 at the federal judgment rate of 3.59%, again applied to the principal amount plus interest accrued through Dec. 31, 2004.

In addition, the creditors want regular interest payments to continue after those payments.

In total $1.27 billion of debt, including pre-Chapter 11 accrued interest, is covered, only a "small fraction" of it still disputed, the unsecured creditors said.

The Chicago-based building materials company filed for bankruptcy on June 25, 2001. Its Chapter 11 case number is 01-02094.

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