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GAF shareholder files Chapter 11

Wayne, N.J.-based G-1 Holdings Inc., the shareholder of GAF Materials Corp., Wayne, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code on Jan. 5. The filing was a response to increasing asbestos-related litigation. GAF, G-1 Holdings' only subsidiary, was not included in the filing and does not share any asbestos liability.

According to Rich Weinberg, G-1 Holdings’ chief executive officer, there had been a dramatic increase in asbestos-liability claims during 2000—70,000 cases were filed against G-1 Holdings during 2000 compared with half as many cases in 1996. G-1 Holdings has settled more than 500,000 claims, which cost $1.5 billion collectively.

The company's liability originates from its 1967 acquisition of Ruberoid Co. During World War II, Ruberoid manufactured asbestos insulation called Calcilite for U.S. Navy ships. Medical studies conducted during the 1960s revealed asbestos-related health threats associated with the product, and G-1 Holdings closed its Calcilite operations.

G-1 Holdings is requesting that the bankruptcy court redefine the company’s liability. G-1 Holdings believes it should compensate only those people who are impaired because of asbestos exposure not those who only have been exposed to asbestos. According to G-1 Holdings representatives, about 80 percent of its asbestos settlements is paid to unimpaired people. This figure reportedly is disputed by plaintiff’s attorneys.

When asked about the effect the filing has on GAF, Bill Collins, GAF president and chief operating officer, said: "GAF is healthy with excellent liquidity and a strong foundation. GAF is committed to growth and further industry leadership."

According to Collins, during the past 10 years, GAF’s sales have increased at a 12 percent annual growth rate; compound operating income has risen about 11 percent; and total cash flow has increased about 16 percent.



1/18/2001




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