Mercerville, NJ, February 7, 2006--Congoleum Corp. said it has filed a modified plan and disclosure statement with the Bankruptcy Court. Under the terms of the modified plan, Congoleum would make a contribution to the plan trust consisting of 3.8 million new Class A Common shares, a convertible security whose value would be based on the share price of reorganized Congoleum, and a cash contribution equal to $7.3 million plus 50% of the interest accrued on Congoleum's 8 5/8% Senior Notes during the period Congoleum is in Chapter 11.
The trust would also be funded by proceeds from Congoleum's insurance policies. Insurance settlements to date amount to approximately $164 million and further settlements are under negotiation. The modified plan of reorganization also provides that interest accrued on Congoleum's 8 5/8% Senior Notes during the period Congoleum is in Chapter 11 would be forgiven, and the maturity date of the Notes would be extended by three years to August 1, 2011. Unpaid pre-petition interest would be paid when the plan becomes effective.
In addition, the modified plan of reorganization revises the proposed arrangements under which different groups of asbestos claimants would share in the insurance proceeds and other assets of the trust to be formed to pay asbestos claims against Congoleum and the procedures the trust would follow for payment of claims.
Roger S. Marcus, Chairman of the Board, commented, "We believe filing our proposed plan is a positive step toward emergence. We have addressed the issues that posed potential obstacles for our previous plans. I feel this plan is fair and will provide greater value to all creditors than any alternative available. While negotiations with the creditors are still underway, I am hopeful they ultimately will be satisfied with the terms of this plan and vote to support it. We can then move ahead with confirmation of a plan and putting this process behind us."
Readers should refer to the plan of reorganization and disclosure statement for additional details. Copies of the modified plan 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.
