WILMINGTON, Del. - Owens Corning received permission yesterday to put $2.2 million into a company 401(k) plan so employees who did not sell the Toledo firm's stock in their retirement plans in the days before its bankruptcy filing will receive some compensation.
U.S. Bankruptcy Court in Wilmington, Del., and the creditors committee also agreed to let OC spend $15 million to buy a South Carolina company and to accept a $500 million credit line from Bank of America during the bankruptcy, said OC spokesman Gregg Bronk. The credit line will allow OC to continue to pay bills.
Meanwhile, OC said yesterday that its legal chief who crafted a program to try to contain the company's burgeoning asbestos injury liability has been named to oversee the firm's financial restructuring. Maura Abeln Smith, the company's general counsel and a senior vice president, will lead the development of a reorganization plan. The building products maker, Toledo's third-largest corporation with annual revenues of about $5 billion, filed for Chapter 11 bankruptcy protection Oct. 5 under mounting asbestos claims and slumping sales of its shingles, insulation, and other products. The firm has paid or expects to pay $9 billion in asbestos claims.
A request heard yesterday by bankruptcy Judge Mary Walrath seeking to help some OC employees was prompted by an undisclosed number of workers who sold 2.1 million shares of company stock in their 401(k) plans as rumors circulated about the impending bankruptcy filing early last month. That entitled those cashing out to $5.1 million.
However, the company repays its retirement plan for such sales by selling some of its own shares the next day. Because the Fortune 500 firm's stock at that time was falling rapidly in price, the delayed reimbursement fell short by $2.2 million, affecting employees who still had stock in the plan. A company attorney has said the issue has raised tensions about loyalty among OC employees.
Employees who did not sell will be notified by Fidelity Investments of Boston, which manages OC's 401(k) plan, how the $2.2 million will be divided, Mr. Bronk said.
“We'll put that back as soon as possible,” he said.
In a separate key motion before Judge Walrath yesterday, OC was granted permission to spend $15 million to buy Foundry & Steel Co. of Anderson, S.C., which has 226 employees. Foundry & Steel is an important supplier to OC's glass-fiber composites business, and the Toledo firm said it was concerned a competitor would buy the business if it did not.
The acquisition is expected to increase revenues for that segment from $13 million this year to $25 million next, followed by growth of at least 10 per cent.
“It's a good deal because we've used them for years,” Mr. Bronk said. “It's a good fit.”
Further, the company received permission to make $125 million in payments, up from $95 million previously authorized, to critical vendors, but the firm's requests to hire a team of bankruptcy attorneys and accountants was continued to a hearing scheduled for Nov. 30.
OC also wants to hire Lazard Freres & Co. as its investment banker, but the creditors' committee has objected.
None of the attorneys representing OC's creditors, who were asked to approve Owens Corning's requests, could be reached for comment after the court proceedings yesterday.