Wednesday, May 23, 2018
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Asbestos continues to weigh on Toledo firms

Asbestos-liability cases have swamped Toledo's three biggest firms, most notably Owens Corning, which filed bankruptcy more than four years ago because of asbestos claims.

But even Owens-Illinois Inc. and Dana Corp., Toledo's other two Fortune 500 firms, have been hard hit.

Total asbestos liability of the local firms is pegged at $7.5 billion to $21 billion or more, according to recent filings with the U.S. Securities and Exchange Commission, court testimony, and documents filed in U.S. Bankruptcy Court.

O-I, a glass-container maker, disclosed in an SEC filing this month that it has reserved nearly $2.9 billion since 1993 for its asbestos problem, in addition to hundreds of millions of dollars paid out by insurance companies.

The firm has taken big accounting hits for asbestos in the last 12 years, from $975 million in 1993 to $550 million in 2000 to $450 million in 2003 to $153 million in last year's fourth quarter.

"What we face is limited, manageable, and declining [asbestos exposure]," said spokesman Carol Gee.

Dana, a major automotive parts supplier, has reserved $139 million for asbestos claims and litigation and has not moved to add to the reserve. "We don't want to sound an alarm when no alarms are necessary," said spokesman Gary Corrigan.

Asbestos is a heat-resistant mineral used in insulation and other products in the 1950s, 1960s, and early 1970s. Even though its use was discontinued, some who worked with the product have become ill. Tens of thousands of liability cases have been filed against companies nationwide, but more may be filed, and trying to anticipate that number adds to the weight of the problem.

OC, a roofing and building-insulation maker, succumbed to the flood of cases in 2000, filing Chapter 11 bankruptcy protection to try to rein in its liability. The firm, which financially seems to be doing well, remains mired in bankruptcy as it and its creditors, including plaintiffs'

lawyers, try to derive a plan for funding the firm's current and future liability.

Estimates of the liability for the firm range from $6 billion to $18 billion, depending on who is estimating.

O-I, the glass-container maker, intends to review its liability in the fourth quarter every year, Ms. Gee said. In recent months, the firm told analysts, it is beginning to see its problem diminish, largely because it quit making asbestos in 1958.

The company reported its payout for claims fell 4.5 percent last year, to $190 million.

Dozens of companies filing asbestos-related bankruptcies in recent decades creates a "last-man-standing" mentality among plaintiffs, said Mr. Corrigan of Dana.

"It's like if three people hit a truck, but two can't pay, they turn to you."

Complicating matters nationally is potential congressional action to create a national asbestos-injury fund, a measure that companies generally favor. But some executives are concerned that a federal fund could, in some cases, increase eventual liability.

OC has carefully followed the progress of various congressional proposals in recent years, including the most recent one that would set up a $140 billion fund over a 27-year period.

"We support the idea of legislation [as long as] it provides the same degree of finality as a bankruptcy," said Steve Krull, OC senior vice president and general counsel.

The amount of OC's liability is a key issue in its bankruptcy, and a federal judge is weighing arguments. OC and asbestos-injury lawyers suing the firm estimate the liability at $6 billion to $18 billion, but other creditors urged the court to set a much lower figure, which would give those creditors a bigger payback on the amount OC owes them.

Contact Homer Brickey at:

or 419-724-6129.

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