New chapter in asbestos suits

Associated Press

TOLEDO, Ohio — Owens Corning filed for bankruptcy protection Thursday after it ran out of options to pay asbestos lawsuit claims that could eventually cost the company $7 billion.

The supplier of building and industrial materials estimated it has paid or agreed to pay $5 billion. It faces about $2 billion more in asbestos payouts even though it stopped selling insulation that contained asbestos more than 25 years ago.

Toledo-based Owens Corning, probably most familiar for its Pink Panther mascot, has paid money to 440,000 people who said asbestos made them ill.

Asbestos payments this year will reach $600 million, more than Owens Corning expects to get in sales from its building products.

"We have attempted through every means known to take care of our liability," said Glen Hiner, chairman and chief executive officer. "That liability will end through some sort of negotiation through a court settlement."

The voluntary Chapter 11 filing in Wilmington, Del., will allow the company to develop a reorganization plan resolving its asbestos liabilities while allowing it to continue operating its businesses, Hiner said.

Asbestos, which can cause health problems when inhaled, is a white flaky substance widely used during the 1940s and 1950s for insulation and in shipbuilding and in power plants. It has been known to cause lung cancer and asbestosis, a lung-scarring disease.

Hiner said the company had made progress toward resolving asbestos claims through a national settlement program, and thought that a bankruptcy protection filing could be avoided.

But claims continue to be filed, 10,000 in the third quarter alone. In addition, demand for building supplies fell off, reducing the money available to pay claims, Hiner said.

The filing follows a path taken by at least 25 companies that once made asbestos.

During recent months, Owens Corning’s stock has dropped below $3 per share from a high of $41 per share in May 1999, and it was dropped from Standard &amp Poor’s 500 index on Sept. 30.

"It just became insurmountable," Barbara Allen, an analyst with Arnhold &amp S. Bleichroeder in New York, said of a flurry of claims against the company in the past two years. "The system seems to be biased in going after companies with the deepest pockets."

Those sickened by asbestos will suffer, also, she said. "Now they will not get paid until the reorganization plan is complete," she said.

Owens Corning stopped selling products containing asbestos in 1972.

The $5 billion cost in claims so far does not include $1.2 billion the company two years ago agreed to pay to settle most of the asbestos lawsuits in place at that time.