"We took this action not only to resolve asbestos lawsuits equitably, but also to protect the long-term value of our business and maintain our leadership position in the market," said William C. Foote, chairman, president and CEO. "It was important to take the litigation out of a dysfunctional tort system and move it to a single forum where the claims can be objectively evaluated.
He noted that USG is the eighth company in the last 18 months that has been forced to utilize Chapter 11 to resolve asbestos claims; over the past two decades, 27 companies have filed for protection under Chapter 11 because of asbestos litigation. Since 1994, U.S. Gypsum has been named in more than 250,000 asbestos-related personal injury claims, and has paid more than $450 million (before insurance recoveries) to manage and resolve asbestos-related litigation. Further, U.S. Gypsum has received more than 22,000 new claims since the beginning of this year. U.S. Gypsum's asbestos personal injury costs (before insurance) have risen from $30 million in 1997 to more than $160 million in 2000, and were expected to exceed $275 million in 2001.
USG also announced it has received a commitment for up to $350 million in debtor-in-possession (DIP) financing from JP Morgan Chase, which will augment the company's liquidity and fund operations during the restructuring process, and enable the company to purchase and pay for goods and services going forward.
"While it is impossible to predict exactly how long our reorganization will take, our goal is to complete the restructuring and emerge from Chapter 11 as quickly as possible, with a comprehensive and final resolution to U.S. Gypsum's asbestos liability," Foote said.