USG Considers Filing Chapter 11, Other Options
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Building materials maker USG Corp. said it is exploring strategic options, including a possible Chapter 11 bankruptcy filing, because of rising asbestos litigation costs and the slow progress of legislation that could control the costs.
Chicago-based USG said lawyers for asbestos plaintiffs have sharply increased settlement demands in the wake of Chapter 11 filings by other companies. Its U.S. Gypsum unit has seen personal injury costs, excluding insurance recoveries, balloon to an estimated $275 million this year, from $162 million last year and $100 million in 1999.
USG shares fell $1.66, or 25%, to close at $5.03 on the New York Stock Exchange.
The company said it has been lobbying Congress to enact laws to minimize potential damages from asbestos lawsuits. It said the recent change to a Democratic majority in the Senate has prompted it to explore other options.
USG said other alternatives being examined include new secured bank financing that would provide it with greater long-term liquidity.
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