W. R. Grace & Co. Files Voluntary Chapter 11 Petition To Resolve Asbestos Claims

Company's Businesses Will Continue to Operate as Usual;

Continued Emphasis on Premier Products and Customer Service



Apr 02, 2001, 01:00 ET from W. R. Grace & Co.

    COLUMBIA, Md., April 2 /PRNewswire/ -- W. R. Grace & Co. (NYSE:   GRA) today
 announced that the Company has voluntarily filed for reorganization under
 Chapter 11 of the United States Bankruptcy Code in response to a sharply
 increasing number of asbestos claims.  This Chapter 11 filing includes 61 of
 Grace's domestic entities.  None of the Company's foreign subsidiaries are
 included in this filing.
     The filing, made today in the U.S. Bankruptcy Court in Wilmington,
 Delaware, will enable the Company to continue to operate its businesses in the
 usual manner under court protection from its creditors and claimants, while
 using the Chapter 11 process to develop and implement a plan for addressing
 the asbestos-related claims against it.  The Company intends to work closely
 with asbestos claimants and other creditors to develop a plan of
 reorganization that will both address valid asbestos claims in a fair and
 consistent manner and establish a sound capital structure for long-term growth
 and profitability.
     The Company also announced that it has obtained $250 million in debtor-in-
 possession financing from Bank of America, N.A.  Following the court's
 approval, the Company can use these funds to help meet the future needs and
 obligations associated with operating its business, including payment under
 normal terms to suppliers and vendors for all goods and services that are
 provided after today's filing.
     The Company expects that employees will continue to be paid in the normal
 manner, and their benefits will not be disrupted.  The Company's qualified
 pension plan for retirees and vested current and former employees is fully
 funded and protected by federal law.
     Grace's Chairman, President, and Chief Executive Officer Paul J. Norris
 said,  "This is a voluntary decision that, although very difficult, was
 absolutely necessary for us.  We believe that the state court system for
 dealing with asbestos claims is broken, and that Grace cannot effectively
 defend itself against unmeritorious claims.  The best forum available to Grace
 to achieve predictability and fairness in the claims settlement process is
 through a federal court-supervised Chapter 11 filing.  By filing now, we are
 able to both obtain a comprehensive resolution of the claims we are facing and
 preserve the inherent value of our businesses.  Under Chapter 11, litigation
 will be stayed and Grace will be able to address all of the valid claims
 against it in a fair and consistent manner in one proceeding.  In the
 meantime, we will continue to operate our business in the usual manner,
 meeting all of our responsibilities to customers, employees, suppliers, and
 business partners.  There is no other forum currently existing that would
 allow us to accomplish all of these objectives."
     Mr. Norris continued, "Until recently, Grace was able to settle claims
 through direct negotiations.  The filings of claims had stabilized, and annual
 cash flows were manageable and fairly predictable. In 2000, the litigation
 environment changed with an unexpected 81% increase in claims, which we
 believe is due to a surge in unmeritorious claims.  Trends in case filings and
 settlement demands, which show no signs of returning to historic levels, have
 increased the risk that Grace will not be able to resolve its pending and
 future asbestos claims under the current system."
     "Moreover, the recent Chapter 11 filings of Babcock & Wilcox, Pittsburgh-
 Corning, Owens Corning, Armstrong, and GAF are resulting in a significant
 increase in damages sought by claimants from Grace.  Grace will now seek,
 through the court-supervised Chapter 11 process, to identify and implement a
 reasonable and just procedure for making payments to creditors and claimants
 determined to have valid claims against the Company."
     Mr. Norris added that, "Grace is a fundamentally sound company with strong
 cash flow.  We have a clear leadership position in all of our major markets,
 many of them in industries vital to the economy.  Over the past several years,
 the senior management and employees together have led the Company to many
 significant achievements, including streamlining the Company's operations and
 driving growth and productivity through our strategic growth initiatives and
 Six Sigma."
     "We are confident that, once we can finally resolve this difficult issue,
 the Company can leverage its inherent value and strong cash flow to emerge
 from reorganization as a strong, financially sound enterprise.  In the
 meantime, we will operate as we always have, providing premier quality
 products and customer service.  We urge Congress to pass legislation to
 address what the Supreme Court has described as an `elephantine mass of
 asbestos cases' that defies customary judicial administration."
     Grace's asbestos liabilities largely stem from commercially purchased
 asbestos added to some of its fire protection products. The Company ceased to
 add any asbestos to its products in 1973.  Grace is a co-defendant with many
 other companies in asbestos litigation, and has claims filed against it across
 the country.  The Company to date has received over 325,000 asbestos personal
 injury claims, and has paid $1.9 billion to manage and resolve asbestos-
 related litigation.  For the year 2000, asbestos-related claims against the
 Company were up 81% from the prior year with even higher increases for the
 first three months of 2001.  Five other major companies involved in asbestos-
 related litigation have voluntarily filed for Chapter 11 under the US
 Bankruptcy Code since January 1, 2000, bringing the total to 26 companies
 since 1982.
     In light of the Chapter 11 filing, Grace's Annual Meeting of Stockholders,
 scheduled for May 10, 2001, has been cancelled.
     Grace is a leading global supplier of catalysts and silica products,
 specialty construction chemicals and building materials, and container
 products.  With annual sales of approximately $1.6 billion, Grace has over
 6,000 employees and operations in nearly 40 countries.  For more information,
 visit Grace's web site at www.grace.com or call the Grace Financial
 Reorganization hotline at 1-800-472-2399 (for international calls use your
 incountry AT&T Direct Access Number).
 
     This announcement contains forward-looking statements that involve risks
 and uncertainties, as well as statements that are preceded by, followed by or
 include the words "believes," "plans," "intends", "targets", "will,"
 "expects," "anticipates," or similar expressions. For such statements, Grace
 claims the protection of the safe harbor for forward-looking statements
 contained in the Private Securities Litigation Reform Act of 1995. Actual
 results may differ materially from the results predicted, and reported results
 should not be considered as an indication of future performance. Factors that
 could cause actual results to differ from those contained in the forward-
 looking statements include those factors set forth in Grace's most recent
 Annual Report on Form 10-KA and quarterly reports on Form 10-Q, which have
 been filed with the SEC.
 
 

SOURCE W. R. Grace & Co.
    COLUMBIA, Md., April 2 /PRNewswire/ -- W. R. Grace & Co. (NYSE:   GRA) today
 announced that the Company has voluntarily filed for reorganization under
 Chapter 11 of the United States Bankruptcy Code in response to a sharply
 increasing number of asbestos claims.  This Chapter 11 filing includes 61 of
 Grace's domestic entities.  None of the Company's foreign subsidiaries are
 included in this filing.
     The filing, made today in the U.S. Bankruptcy Court in Wilmington,
 Delaware, will enable the Company to continue to operate its businesses in the
 usual manner under court protection from its creditors and claimants, while
 using the Chapter 11 process to develop and implement a plan for addressing
 the asbestos-related claims against it.  The Company intends to work closely
 with asbestos claimants and other creditors to develop a plan of
 reorganization that will both address valid asbestos claims in a fair and
 consistent manner and establish a sound capital structure for long-term growth
 and profitability.
     The Company also announced that it has obtained $250 million in debtor-in-
 possession financing from Bank of America, N.A.  Following the court's
 approval, the Company can use these funds to help meet the future needs and
 obligations associated with operating its business, including payment under
 normal terms to suppliers and vendors for all goods and services that are
 provided after today's filing.
     The Company expects that employees will continue to be paid in the normal
 manner, and their benefits will not be disrupted.  The Company's qualified
 pension plan for retirees and vested current and former employees is fully
 funded and protected by federal law.
     Grace's Chairman, President, and Chief Executive Officer Paul J. Norris
 said,  "This is a voluntary decision that, although very difficult, was
 absolutely necessary for us.  We believe that the state court system for
 dealing with asbestos claims is broken, and that Grace cannot effectively
 defend itself against unmeritorious claims.  The best forum available to Grace
 to achieve predictability and fairness in the claims settlement process is
 through a federal court-supervised Chapter 11 filing.  By filing now, we are
 able to both obtain a comprehensive resolution of the claims we are facing and
 preserve the inherent value of our businesses.  Under Chapter 11, litigation
 will be stayed and Grace will be able to address all of the valid claims
 against it in a fair and consistent manner in one proceeding.  In the
 meantime, we will continue to operate our business in the usual manner,
 meeting all of our responsibilities to customers, employees, suppliers, and
 business partners.  There is no other forum currently existing that would
 allow us to accomplish all of these objectives."
     Mr. Norris continued, "Until recently, Grace was able to settle claims
 through direct negotiations.  The filings of claims had stabilized, and annual
 cash flows were manageable and fairly predictable. In 2000, the litigation
 environment changed with an unexpected 81% increase in claims, which we
 believe is due to a surge in unmeritorious claims.  Trends in case filings and
 settlement demands, which show no signs of returning to historic levels, have
 increased the risk that Grace will not be able to resolve its pending and
 future asbestos claims under the current system."
     "Moreover, the recent Chapter 11 filings of Babcock & Wilcox, Pittsburgh-
 Corning, Owens Corning, Armstrong, and GAF are resulting in a significant
 increase in damages sought by claimants from Grace.  Grace will now seek,
 through the court-supervised Chapter 11 process, to identify and implement a
 reasonable and just procedure for making payments to creditors and claimants
 determined to have valid claims against the Company."
     Mr. Norris added that, "Grace is a fundamentally sound company with strong
 cash flow.  We have a clear leadership position in all of our major markets,
 many of them in industries vital to the economy.  Over the past several years,
 the senior management and employees together have led the Company to many
 significant achievements, including streamlining the Company's operations and
 driving growth and productivity through our strategic growth initiatives and
 Six Sigma."
     "We are confident that, once we can finally resolve this difficult issue,
 the Company can leverage its inherent value and strong cash flow to emerge
 from reorganization as a strong, financially sound enterprise.  In the
 meantime, we will operate as we always have, providing premier quality
 products and customer service.  We urge Congress to pass legislation to
 address what the Supreme Court has described as an `elephantine mass of
 asbestos cases' that defies customary judicial administration."
     Grace's asbestos liabilities largely stem from commercially purchased
 asbestos added to some of its fire protection products. The Company ceased to
 add any asbestos to its products in 1973.  Grace is a co-defendant with many
 other companies in asbestos litigation, and has claims filed against it across
 the country.  The Company to date has received over 325,000 asbestos personal
 injury claims, and has paid $1.9 billion to manage and resolve asbestos-
 related litigation.  For the year 2000, asbestos-related claims against the
 Company were up 81% from the prior year with even higher increases for the
 first three months of 2001.  Five other major companies involved in asbestos-
 related litigation have voluntarily filed for Chapter 11 under the US
 Bankruptcy Code since January 1, 2000, bringing the total to 26 companies
 since 1982.
     In light of the Chapter 11 filing, Grace's Annual Meeting of Stockholders,
 scheduled for May 10, 2001, has been cancelled.
     Grace is a leading global supplier of catalysts and silica products,
 specialty construction chemicals and building materials, and container
 products.  With annual sales of approximately $1.6 billion, Grace has over
 6,000 employees and operations in nearly 40 countries.  For more information,
 visit Grace's web site at www.grace.com or call the Grace Financial
 Reorganization hotline at 1-800-472-2399 (for international calls use your
 incountry AT&T Direct Access Number).
 
     This announcement contains forward-looking statements that involve risks
 and uncertainties, as well as statements that are preceded by, followed by or
 include the words "believes," "plans," "intends", "targets", "will,"
 "expects," "anticipates," or similar expressions. For such statements, Grace
 claims the protection of the safe harbor for forward-looking statements
 contained in the Private Securities Litigation Reform Act of 1995. Actual
 results may differ materially from the results predicted, and reported results
 should not be considered as an indication of future performance. Factors that
 could cause actual results to differ from those contained in the forward-
 looking statements include those factors set forth in Grace's most recent
 Annual Report on Form 10-KA and quarterly reports on Form 10-Q, which have
 been filed with the SEC.
 
 SOURCE  W. R. Grace & Co.

RELATED LINKS

http://www.grace.com