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Published: Tuesday, 3/16/2010

Trust fund that pays out damage claims slashes stake in firm

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

A trust fund that pays damage claims to people made sick by asbestos produced by Owens Corning has cut its stake in the Toledo firm by half.

Documents filed this month with the U.S. Securities and Exchange Commission by the Owens Corning/Fibreboard Personal Injury Trust of Wilmington, Del., show that the fund has cut its holdings to 14.1 million shares from 28.2 million shares.

The fund, which was formed in 2006 as part of OC's Chapter 11 bankruptcy case to resolve asbestos-injury claims, had dropped to the third-largest shareholder of the Fortune 500 company from first.

Stephen Krull, OC general counsel, said the sale does not indicate that trust executives lacked confidence in the company or that they have run out of cash.

"The issue is diversification," Mr. Krull said. "They looked at their holdings and they wanted to be a bit more diversified."

He said OC officials cooperated fully in the sale, which was underwritten by New York investment banks Merrill Lynch and JP Morgan.

The trust, following market turmoil of 2008-2009, has reduced the amount it pays on each claim to 10 to 11 cents on the dollar, according to its Web site.

But Mr. Krull said the fund has ample reserves to continue to pay claims.

OC filed bankruptcy a decade ago to resolve tens of thousands of claims filed by construction workers and others made sick by inhaling fibers from asbestos-containing insulation. It stopped making the product in the early 1970s.

As part of the bankruptcy, the trust fund assumed the firm's obligations to asbestos claimants. And, even if it runs out of money to pay claims, the Toledo company has no further obligation to the fund or claimants, Mr. Krull said.

Trust officials did not return calls seeking comment.

With the stock sale, the trust has an 11 percent stake in OC. Holding bigger blocks of stock in the Toledo-based producer of building materials and fiberglass are mutual fund family Fidelity Management, with 15 percent of shares, and hedge fund Wayzata Investment Partners, with 13 percent.

The company revealed plans for the stock sale in an SEC filing last month. Through the sale, the trust fund raised about $322 million by selling each share for an average of $22.86.

Contact Gary Pakulski at:

gpakulski@theblade.com

or 419-724-6082.



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