- The Washington Times - Tuesday, May 24, 2005

From combined dispatches

Shares of companies with asbestos liabilities surged yesterday on the hope that the apparent resolution of a U.S. Senate battle over judiciary nominations would clear the way for passage of asbestos legislation.

Late Monday, a bipartisan group of senators reached a compromise to avert a showdown over President Bush’s nominees to federal judgeships. The struggle over the nominations last week had stalled progress on a proposed trust fund to compensate victims of asbestos contamination.

“While not all parties are embracing the deal, the agreement improves the near-term prospects and removes a large obstacle for legislative issues, particularly asbestos legislation, which was at substantial risk to falling victim to the judicial showdown,” Susquehanna Financial Group analyst Crystal Skinner wrote in a research note yesterday.

Shares of Owens Corning, W.R. Grace & Co. and other companies with asbestos-related costs soared as the Senate moved closer to considering a $140 billion fund for asbestos-exposure victims.

Shares of Toledo, Ohio-based Owens Corning, the largest U.S. insulation maker, jumped $1.02, or 29 percent, to $4.55 in over-the-counter trading. W.R. Grace, based in Columbia, Md., rose $1.37, or 15 percent, to $10.50 in New York Stock Exchange composite trading.

The legislation would eliminate lawsuits that have forced 74 companies into bankruptcy. Senate Democrats had twice halted debate on the bill as Republicans planned to invoke the so-called “nuclear option,” stripping Democrats of power to block Mr. Bush’s judicial appointments using filibusters. A showdown expected yesterday was averted when 14 senators agreed to a compromise.

“The perception is the [asbestos] bill will ultimately be approved,” Cantor Weiss & Friedner money manager Warren Harrison said in a telephone interview. “The odds now have risen significantly with the compromise on the nuclear option.”

Judiciary Committee Chairman Arlen Specter, Pennsylvania Republican, probably has enough votes to pass the measure out of committee today or tomorrow, Mr. Harrison said. The asbestos bill probably will be approved by the full Senate soon after the Memorial Day holiday, he said. The Senate is in recess next week. The House then would probably approve the legislation, Mr. Harrison said.

The bill would use money from companies and insurance companies facing asbestos lawsuits to pay victims of asbestos diseases from $25,000 to $1.1 million. Asbestos, a fibrous mineral used to make insulation, ceiling tiles and building materials, is known to cause cancer and respiratory ailments.

Senate Democratic leader Harry Reid of Nevada said that the compromise on judicial nominees means the asbestos bill “is breathing again.”

Shares of USG Corp., the world’s largest wallboard maker, rose $4.03, or 9.3 percent, to $47.53 in NYSE composite trading. Chicago-based USG mixed asbestos into wall-joint compounds.

Shares of McDermott International Inc., a unit of Babcock & Wilcox that filed for bankruptcy because of asbestos claims, gained $2.17, or 11 percent, to $21.51 in NYSE composite trading.

Armstrong Holdings Inc., North America’s largest maker of vinyl flooring, jumped 61 cents, or 23 percent, to $3.31 in over-the-counter trading. Armstrong, which filed for bankruptcy in 2000, manufactured and installed asbestos insulation and used the mineral in some flooring products and gasket materials.

Owens Corning began selling its Kaylo insulation containing asbestos for use in pipes and around boilers in 1953 and stopped making asbestos products in 1972. The company faced more asbestos liability after buying building-products maker Fibreboard Corp. in 1997.

Grace used asbestos in fireproofing materials, and it mined and processed asbestos-tainted vermiculite, a mineral used in insulation, potting soil and fertilizer. The U.S. indicted seven current and former Grace executives in February for purportedly conspiring to release asbestos at a vermiculite mine near Libby, Mont.

These companies and others have been sued by people claiming to have lung disease and other injuries as a result of exposure to asbestos, a material that was used in construction and manufacturing. Asbestos-related personal-injury lawsuits have spread through the nation’s court system for more than two decades, and have sent numerous manufacturing companies into bankruptcy.

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