On Dec. 22, 2006, the U.S. Bankruptcy Court for the Western District of Pennsylvania issued a decision denying confirmation of the most recent amended plan of reorganization for Pittsburgh Corning Corporation (PC). PPG Industries, Inc. (PPG) has owned 50% of PC since 1937.
The plan would have allowed independent asbestos claims against PPG to be channeled to the proposed trust in the bankruptcy case of PC, which the judge indicated that PPG may not do. While the proposed bankruptcy exit plan for PC was not confirmed, the judge has given the parties involved time to change their proposal to conform to the ruling. Management indicated that it is studying the bankruptcy court's decision to determine its next steps.
Fitch expects PPG to resolve the issues raised by the bankruptcy judge in her latest ruling that would allow PPG to use the proposed trust to address most of its asbestos claims. It is Fitch's expectation that this issue will not likely be fully resolved in the near term and Fitch will continue to monitor the progress of PC's reorganization plan as well as potential independent asbestos claims against PPG that may not be addressed in the PC plan.
The company has been a defendant in lawsuits involving asbestos claims for over 30 years, mostly related to its 50% ownership of PC, a 50-50 venture owned by PPG and Corning Incorporated. In May 2002, PPG agreed to a $2.7 billion settlement agreement of outstanding asbestos claims against PPG and PC. Under the settlement agreement, PPG would make aggregate cash payments of approximately $998 million (payable according to a fixed payment schedule over 21 years), contribute 1.4 million shares of its stock, and convey the stock it owns in PC to a trust. PPG's participating historical insurance carriers would make cash payments to the trust of approximately $1.7 billion.
Founded in 1883, PPG is a global supplier of coatings, glass, fiberglass, and chemicals. The company has 108 manufacturing facilities and equity affiliates in more than 20 countries. PPG is the world's largest producer of transportation coatings and a leading maker of industrial and packaging coatings, architectural coatings, aircraft transparencies, flat and fabricated glass, continuous-strand fiberglass, and chlor-alkali and specialty chemicals.
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