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Owens Corning to record USD 538 million expenses

Owens Corning will record USD 538 million in expenses that it may have to pay a group of bank lenders following the August 2005 court ruling that disrupted its plan to exit bankruptcy, the building ma…

Owens Corning will record USD 538 million in expenses that it may have to pay a group of bank lenders following the August 2005 court ruling that disrupted its plan to exit bankruptcy, the building materials giant said in a regulatory filing on 24 October 2005. In a Form 8-K filed with the Securities and Exchange Commission, Owens Corning said it would record USD 531 million related to post-petition interest and USD 7 million related to certain other postpetition fees under a credit agreement with a group of its pre-bankruptcy lenders. Owens Corning said in the filing that the USD 538 million was its “best estimate of the potential liability for postpetition interest and certain other postpetition fees”. On 15 August 2005, the U.S. Third Circuit Court of Appeals reversed a lower court decision and ruled that the Ohio building material maker should be treated as many companies, not one, for the purposes of its bankruptcy reorganization. Based on the ruling, Owens Corning said it is “probable” it will have to pay a group of creditors post-petition interest and fees, the filing said. The company has not indicated whether it will appeal the ruling. Led by Credit Suisse First Boston, the creditors overturned the so-called substantive consolidation in Owens Corning“s bankruptcy case, arguing that compulsory single-company treatment unjustly cancelled loan guarantees. Owens Corning has indicated it would file an amended Chapter 11 plan and disclosure statement by 31 December 2005. In December 2003 the company won court approval to send its plan to creditors for a vote. However, a series of legal challenges in the case has prevented the proposal from being circulated to creditors.

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