Mercerville, NJ, July 26--Congoleum has filed a modified plan of reorganization and disclosure statement with the Bankruptcy Court to incorporate certain technical modifications to the plan filed in June.
A hearing to consider approval of the disclosure statement is scheduled for July 28, 2005, after which Congoleum expects to commence soliciting acceptances from certain claimant creditors affected by these modifications.
Congoleum also recently requested Bankruptcy Court approval for a settlement agreement with certain underwriters at Lloyd's, London. This agreement, if approved, will bring total insurance settlements to date to $139 million. A hearing has been scheduled for August 8, 2005 for the Bankruptcy Court to consider approving the settlement.
Under the terms of the settlement, the certain underwriters will pay $19,950,000 into an escrow account. The escrow agent will transfer the funds to the trust for asbestos claimants to be formed by Congoleum's plan once the plan goes effective and the Court approves the payment.
Congoleum expects to book a charge of $15.5 million as part of its second quarter results to increase its reserves to the levels that the company now anticipates will now be needed to complete confirmation of this latest plan.
Roger S. Marcus, chairman of the board, commented, "We are very pleased to be moving ahead with the new plan. Based on the expected timing of the remaining steps, we are optimistic that we could emerge from bankruptcy sometime in the first quarter of 2006."
Marcus continued "Unfortunately, the insurers' opposition to virtually every single step we have taken to date has prolonged the process and greatly inflated the cost of an already expensive undertaking. Our second quarter results will be negatively affected by the expense of these delays and the intense litigation underway.
"On a positive note, the progress we are making with insurance settlements is encouraging. Not only is this latest agreement a favorable development, but we are also seeing momentum build in other negotiations. I am optimistic about further settlements in the near future, adding to the significant assets already available for current and future claimants when our plan is confirmed. With each settlement we face one less adversary in putting this all behind us."
Copies of the modified plan of reorganization and disclosure statement will be filed by Congoleum with the Securities and Exchange Commission as exhibits to a Form 8-K. They will also be available on the investor relations section of Congoleum's website at www.congoleum.com.
On December 31, 2003, Congoleum Corporation filed a voluntary petition with the United States Bankruptcy Court for the District of New Jersey (Case No. 03-51524) seeking relief under Chapter 11 of the United States Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago.
