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Published: Friday, 11/3/2006

A bittersweet revival

THE re-emergence of insulation and building products giant Owens Corning after six years in the throes of bankruptcy is good news for Toledo and, most of all, the Fortune 500 company's 20,100 employees, including 1,100 at its headquarters downtown.

But as happy as OC's current executives and workers are to finally be out from under the crushing asbestos liability that drove the firm into Chapter 11, the revival is bittersweet for many.

They would be the former shareholders and retirees who lost hundreds of millions of dollars when OC's stock tanked due to the mismanagement and hubris of executives - principally former CEO Glen Hiner - who ran the company into the ground in an ill-fated attempt to build it into a $5 billion enterprise.

OC produced insulation containing deadly asbestos from 1953 to 1972, so the liability threat preceded Mr. Hiner's tenure. But he inexplicably compounded the problem in 1997 with the $600 million purchase of Fibreboard, a vinyl-siding firm with its own severe asbestos problem. Overall, claimants to an asbestos trust fund will get some $5 billion, of which $1.8 billion is attributable to Fibreboard.

If OC had moved as forthrightly to deal with the asbestos liability as it did in assembling a fleet of corporate jets and building its $100 million riverfront headquarters, perhaps the ordeal of bankruptcy would not have been necessary or at least not as severe.

As part of the move out of bankruptcy, each OC employee is being given 100 shares of new stock. The gift is a well-meaning gesture to boost morale, but it's cold comfort to former shareholders, whose old stock was canceled as part of the settlement. They get the "right" to buy a limited number of new shares at a relatively high price - $45.25 - which is not a good deal unless the stock soars beyond expectations. At the end of its first day, it was trading at $27.60.

It's no wonder that former shareholders believe, as one put it, that the settlement "threw us out the window." OC employees with company shares in their 401k plans lost more than $150 million, a setback from which many never recovered.

The importance of keeping Owens Corning alive as the Toledo area's third-largest corporation cannot be overemphasized and we wish the company well. But it also is important to the history of industry in this community to remember why it almost died and who was responsible.

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