W.R. Grace & Co. this week asked for a two-year extension of its $250 million bankruptcy loan while a federal judge weighs how much the Columbia-based specialty chemicals maker will have to pay to settle its asbestos-related claims.
Grace is asking the U.S. Bankruptcy Court in Wilmington, Del., to extend the line of credit through April 2010. The loan, which is scheduled to expire April 1, has been amended several times since it was first approved in 2001.
By extending the financing agreement, Grace avoids "substantial expenses" in obtaining a replacement loan, the company said in papers filed with the court Monday. Grace said the loan gives it "liquidity protection in the face of significant economic uncertainty."
The move comes as the company faces a key point in its reorganization process. A judge is considering how much it will cost Grace to settle the thousands of asbestos-related claims that were filed against it and forced the company into bankruptcy. In hopes of lessening the dollar amount, Grace is asking the judge to invalidate some of the claims.
The court will consider the company's request to extend its bankruptcy loan at a hearing March 17. If the extension is granted, Grace has agreed to pay Bank of America and a group of lenders a $2 million fee, based on current market conditions, according to the filing. Grace filed for Chapter 11 bankruptcy protection in 2001 in the wake of 135,000 asbestos-related claims spanning decades.
The company and several of its former executives also face criminal charges related to a vermiculite mine in Libby, Mont., where 1,200 residents and former workers have been sickened or died from asbestos-related disease.
In a trial that began last month in Wilmington, Judge Judith Fitzgerald is being asked to decide how much it will cost Grace to resolve its asbestos lawsuits and exit bankruptcy. The company hopes the judge will declare some claims invalid. However, Grace runs the risk that the judge will set the company's liability much higher than the company's worth. Grace stock closed yesterday at $23.08 per share, with 70.6 million shares outstanding, giving it a market value of about $1.6 billion.
Estimates made by consultants hired by the company and the claimants vary widely, from $385 million to $6.2 billion.
In July, the company lost exclusive rights to file its bankruptcy reorganization plan, which means a creditor could file a competing plan.
The trial is expected to continue into the spring. Grace executives declined to comment yesterday.
allison.connolly@baltsun.com