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USG: Suit May Lead to Bankruptcy

June 12, 2001
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Building products manufacturer USG Corp. said recently that fast-mounting asbestos litigation costs may force it to seek federal bankruptcy protection, sending its stock plummeting. USG said asbestos personal injury costs for its subsidiary U.S. Gypsum have risen from $100 million in 1999 to an expected $275 million this year. The Chicago-based company blamed the increase on the fact that seven companies that were defendants in asbestos lawsuits have filed for Chapter 11 bankruptcy since the beginning of 2000, causing lawyers to sharply increase their settlement demands to other defendants.

"We continue to believe that appropriate legislation would provide the best solution to the asbestos problem," said William C. Foote, chairman, president and chief executive officer. "We are making progress on the legislative front, but the process is not moving as quickly as we hoped. At the same time, settlement demands have increased dramatically, to the point that they are completely out of proportion to our legitimate liability." He said that while the company remains committed to pursuing a legislative solution, "We are examining every alternative that will stop the value drain that is occurring as we are forced to pay more than our fair share of the liability."

The company's website is located at http://www.usg.com.

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