USG exits Chapter 11 bankruptcy; sets June 30 as rights offering record date

By Caroline Salls

Pittsburgh, June 20 - USG Corp. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect Tuesday, according to a company news release.

The company said it is beginning the process of repaying its creditors and funding an asbestos trust that will compensate asbestos personal injury claimants.

"It is a great day for USG," chairman and chief executive officer William C. Foote said in the release.

"Asbestos claimants will be compensated, our banks, bondholders and suppliers will be repaid in full - 100 cents on the dollar, with interest - and shareholders who stood by us through this process will be rewarded by retaining ownership in the company."

The plan of reorganization, which was approved by more than 99% of the asbestos personal injury claimants voting, requires USG to establish and fund a personal injury trust to pay asbestos personal injury claims.

According to the release, the company made a $900 million payment to the new trust Tuesday, and two subsequent payments totaling $3.05 billion will be made within the next 12 months if Congress fails to enact the FAIR Act, which is being considered in the Senate.

Treatment of creditors under the plan will include:

• Holders of $14,000 in priority claims will receive 100% recovery in cash;

• Holders of $2,200 in secured claims will receive 100% recovery in cash or reinstatement of their claim, at the company's option;

• Holders of $471.01 million in credit facilities claims will receive 100% recovery in cash. Any letter of credit outstanding as of the effective date will be cash collateralized, refinanced, canceled or replaced;

• Holders of $289.25 million in senior notes claims will receive 100% recovery in cash;

• Holders of industrial revenue bond claims will receive 100% recovery in either cash or reinstatement of their claim, at the company's option;

• Holders of $115 million in general unsecured claims will receive 100% recovery in cash; receive 100% recovery in either cash or reinstatement of their claim, at the company's option;

• Holders of asbestos personal injury claims will receive their share of the asbestos personal injury trust;

• Holders of asbestos property damage claims will receive 100% recovery in cash;

• Holders of stock interests in USG and its subsidiaries will have their interests reinstated.

Rights offering

The company said financing for the plan is expected to come from cash on hand, a $1.8 billion rights offering to stockholders backstopped by Berkshire Hathaway Inc., tax refunds and new long-term debt.

USG set June 30 as the record date for its rights offering, under which USG said it will distribute at no charge to stockholders one transferable right for each share of common stock held on the record date.

Each right will entitle a stockholder to purchase one share of USG common stock for $40.00. The rights will expire on July 27.

The rights are expected to trade on the New York Stock Exchange under the symbol USG RT.

USG, a Chicago-based building materials company, filed for bankruptcy June 25, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 01-02094.

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