W.R. Grace files reorganization plan based on asbestos personal injury claims settlement

By Caroline Salls

Pittsburgh, March 2 - W.R. Grace & Co. filed a plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Delaware.

According to an 8-K filed with the Securities and Exchange Commission, the company's official committee of asbestos personal injury claimants, the legal representatives of its future asbestos personal injury claimants and its official committee of equity security holders are joint proponents of the plan.

However, the company said its official committee of unsecured creditors, official committee of asbestos property damage claimants and the legal representative of future asbestos property damage claimants are not plan proponents.

The plan is based on an asbestos personal injury claims settlement. Under that settlement, an asbestos personal injury trust will be established.

The trust will be funded with $250 million in cash, plus interest accruing from Jan. 1 through the plan effective date at the same rate as the company's senior debt; a warrant to purchase 10 million shares of W.R. Grace's common stock at an exercise price of $17 per share, expiring one year from the plan effective date; rights to proceeds from the company's asbestos-related insurance coverage; cash and stock from settlement agreements with Sealed Air Corp., Cryovac, Inc. and Fresenius Medical Care Holdings, Inc.; and deferred payments at $110 million per year for five years, beginning in 2019, and $100 million per year for 10 years beginning in 2024.

The company said the deferred payments will be obligations of reorganized W.R. Grace and backed by 50.1% of the parent company's common stock.

Other settlements

W.R. Grace said the plan also provides for the resolution of unresolved asbestos property damage claims and U.S. and Canadian ZAI property damage claims.

All asbestos property damage claims, other than the ZAI claims, will be channeled to an asbestos property damage trust and paid in full, while the ZAI claims will be paid in accordance with a ZAI claims settlement.

The asbestos property damage trust will be funded for the benefit of U.S. ZAI claims with an initial payment of $30 million, plus interest from April 1 to the plan effective date.

A deferred payment of $30 million will be paid three years after the effective date, and a series of up to 10 contingent payments of $8 million each over the ensuing 20 years are available, provided specified conditions are met, including that the assets available in the trust to pay U.S. ZAI claims fall below $10 million.

Under the Canadian ZAI claims settlement, the company has agreed to pay C$6.5 million to a claims fund to pay all valid claims, which will be channeled to the asbestos personal injury trust on the plan effective date.

Under the Sealed Air and Fresenius settlement, more than $1 billion in cash and other consideration will be transferred to the asbestos personal injury and property damage trusts.

Plan creditor treatment

Treatment of creditors will include:

• Holders of $30.7 million in administrative claims and $38.4 million in priority tax claims will be paid in full in cash;

• Holders of $822,421 in priority claims and $4.7 million in secured claims will be paid in full in cash, plus 4.19% interest;

• An estimated $169.7 million in employee benefit claims will be reinstated;

• All asbestos claims will be treated in accordance with their respective trust and settlement agreements;

• Holders of $845.3 million in general unsecured claims will be paid in full in cash, plus interest at a rate that will depend on the type of claim;

• Holders of equity interests in the parent company will retain their interests; and

• Equity interests in debtors other than the parent company will remain unaltered by the plan.

The company said its plan confirmation hearing is scheduled to be held in two stages, with the first stage set for June 22 to June 25 and phase 2 scheduled for Sept. 8, 2009 to Sept. 11, 2009.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.