June 21, 1996 in Nation/World

Owens Corning Takes Big Charge To Cover Flood Of Asbestos Claims

Associated Press
 

Owens Corning Corp. said Thursday it would record a $1.1 billion charge against its earnings in the second quarter to cover asbestos claims into the next century.

The company also said it is negotiating with 30 plaintiff attorneys to resolve outstanding cases and claims that might be filed in the future. While the talks go on, the attorneys have agreed not to file any claims against the company unless they involve malignancies.

The company said it believes it now has set aside enough money to cover the costs of all pending and future significant personal injury asbestos claims.

The company said it expects the increased reserve will remove much of the doubt that has weighed on the company’s stock in recent years.

In another step that might help bolster the stock, Owens Corning said it would have enough cash to pay shareholders an annual dividend of 25 cents per share starting in October. It last paid a dividend in 1986.

The company’s stock, which rose more than $1 Wednesday on news that it would announce developments in its asbestos situation, rose another $1.12-1/2 Thursday to $41.87-1/2.

As of the end of May, Owens Corning said 146,000 personal injury cases were pending against the company and that more than 21,000 claims had been filed so far this year.

Owens Corning said the $1.1 billion charge will depress its after-tax earnings by $545 million. The company said it expects to eventually recover $225 million from insurance.

Owens Corning also said it had sued five employees of three testing laboratories that the company claims rigged tests that were used to support tens of thousands of medical claims.

The company said as many as 40,000 of the recent claims involve plaintiffs whose tests weren’t administered properly or were manipulated by the laboratory.

The testing lab employees named in the company’s suit filed in Louisiana could not immediately be reached for comment.

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