USG files for bankruptcy protection

Cites Asbestos Litigation as Cause

NorthWest Indiana Times

Building products manufacturer USG Corp. filed for federal bankruptcy protection Monday, citing the growing costs of asbestos litigation.

The Chicago-based company's major domestic subsidiaries -- U.S. Gypsum, USG Interiors, Inc. and L&W Supply Corp. -- also filed Chapter 11 petitions.

The action followed USG's warning on June 4 that it was considering the move, an announcement that sent its stock plummeting 42 percent through the end of last week. Monday's statement accelerated the selloff; USG shares closed down 15 cents, or 4 percent, at $3.73 on the New York Stock Exchange after initially plunging as much as 12 percent.

"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 chief executive officer.

USG said seven other companies that were defendants in asbestos lawsuits have filed for Chapter 11 bankruptcy in the last 18 months, causing lawyers to increase their settlement demands to other defendants.

"U.S. Gypsum can afford to pay for its own liability, but it cannot pay for the liability of other companies or pay everyone who was exposed to asbestos-containing products - yet that is exactly what is happening because of the high volume of new cases and the other asbestos-related bankruptcies," Foote said.

U.S. Gypsum has been named in more than 250,000 asbestos-related personal injury claims since 1994 and has paid more than $450 million for litigation. The company said asbestos personal injury costs for U.S. Gypsum have increased from $100 million in 1999 to an expected $275 million this year.

USG said its operations will continue without interruption despite the bankruptcy filing. USG had $3.78 billion in revenues last year. The company makes gypsum wallboard, joint compounds, ceiling and tile grid for residential and commercial construction.

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