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Published: Friday, 5/12/2006

Advisers urge those holding OC stock to sell

Some former shareholders of Owens Corning say they won't be gunshy about purchasing the new company stock, but investment advisers suggest anyone holding shares now should sell.

"It's a big, well-known company that investors might want to take a look at," said Peggy Schmeltz, of Bowling Green, a trustee of a national investment club group.

"I think it would be a good buy," said Mike Zapiecki, a Toledo business man who owned a couple of hundred OC shares in 1999-2000 when the price plunged from $40 to $30, then to $15, and eventually to pennies after the 2000 bankruptcy.

The Toledo building products maker announced a deal this week with its creditors that it says will enable it to emerge from Chapter 11 bankruptcy before the end of the year. Included in the arrangement is cancellation of the existing stock and issuance of 131 million new shares, most of which will be held by creditors.

How quickly the public will be able to buy shares is uncertain.

In the bankruptcy of Johns Manville Corp. 15 years ago, new shares went on the market with a day or two, and although creditors owned them initially, millions of shares were sold to the public within a month, a spokesman said.

Ms. Schmeltz, of the National Association of Investors Corp., Madison Heights, Mich., said the OC bankruptcy likely won't deter new investors.

People who still have OC shares, which traded yesterday for nearly $1.90, will receive rights to buy the new stock for $45.25 a share over a seven-year period. But if the stock never rises to that level, the warrants are worthless.

Robert Heisler, manager of the Edward Jones brokerage in Sylvania, said 15 of his clients had OC stock before the bankruptcy, and all but two have sold. As for the new stock, he said not enough is known.

Michael Holly, principal in the Spring Meadows office of Wachovia Securities Financial Network, agreed. "At this point, there's not a lot of information," he said, "but there's a lot of interest out there."

If the agreement announced this week pans out, OC will get court approval to exit bankruptcy in September, six years after it filed because of mounting asbestos-liability claims. It has had a strong financial performance in the past year.

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