W. R. Grace resolves final major obstacle to its emergence from bankruptcy after 12 years, subject to court approval; company will pay lenders US$129M, plus interest from Dec. 31, 2013, in addition to distributions under reorganization plan

LOS ANGELES , December 24, 2013 () – W.R. Grace & Co. reached an agreement with a group of bank lenders that resolves the final major obstacle to the chemical company’s emergence from bankruptcy court protection after 12 years.

The company said in a filing yesterday with the U.S. Securities and Exchange Commission that it will pay the lenders $129 million, plus interest from Dec. 31, 2013, in addition to the distributions under its reorganization plan. The settlement is subject to bankruptcy court approval, the company said. The company said it anticipates emerging from bankruptcy on Jan. 31.

Grace filed for Chapter 11 protection in 2001 to deal with claims its asbestos products injured users. Under a reorganization plan approved in January 2011, Columbia, Maryland-based Grace will fund a trust to compensate people with lung diseases related to asbestos, once used in products including car brakes and fireproof insulation.

“We are extremely pleased to have helped make this final settlement possible, and we recognize that the ability of W.R. Grace to emerge from bankruptcy benefits everyone with a stake in the company’s future,” John Bader, chairman and chief investment officer of Halcyon Asset Management, Grace’s largest single creditor, said in an e-mailed statement.

Bankruptcy Wave

Grace was the last of a wave of multibillion-dollar bankruptcies filed in 2000 and 2001 by companies trying to limit their financial exposure to hundreds of thousands of asbestos suits. Asbestos particles can lodge deep in the lungs, causing respiratory illnesses and cancer.

In 2006, Owens Corning, once the world’s largest maker of insulation products, and USG Corp., once the biggest maker of gypsum wallboard, both ended asbestos-related bankruptcies. A year later, they were followed by vinyl flooring maker Armstrong World Industries and auto-parts maker Federal-Mogul Corp.

The banks in the settlement announced yesterday, including Bank of America NA, Barclays Plc and JPMorgan Chase Bank NA, argued on appeal that they were entitled to $185 million in interest on their claims because shareholders are retaining stock worth $4.9 billion.

Grace’s Chapter 11 plan is based on a settlement from April 2008 resolving all present and future asbestos personal-injury claims and asbestos property-damage claims. When Grace filed bankruptcy it faced more than 100,000 claims that its asbestos products harmed users.

The case is In re W.R. Grace & Co., 01-bk-01139, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--With assistance from Steven Church in Wilmington, Delaware, Bill Rochelle in New York and Jack Kaskey in Houston. Editors: Andrew Dunn, Mary Romano

To contact the reporter on this story: Edvard Pettersson in Federal court in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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