Frequently Asked Questions

General
Creditor Claims
Legal Entity Restructuring
Ongoing Business Operations
Existing Owens Corning Stock

General

When did Owens Corning emerge from bankruptcy?
Owens Corning emerged from bankruptcy on October 31, 2006.
What does emergence mean?
Emergence means that Owens Corning is no longer in bankruptcy.
What determines when a company emerges?
Once a company’s plan of reorganization is confirmed by the bankruptcy court, the company must prepare to implement all the terms outlined in that plan and secure the appropriate financing so that it can pay its creditors according to the terms of the plan. In our case, we also chose to let the appeal period expire before we emerged.
What does emergence mean for OC employees on a day-to-day basis?
Upon emergence, all employees will become official “owners” of OC through a gift of stock or the equivalent that all of you will receive. Other than that, it is really means business as usual.
- There will not be any changes to jobs, pay or benefits, and you won’t notice a difference in the way we do business.
- There will be some changes to communications practices and accounting policies. Those changes are already being explained in OC News Special Editions.
What does emergence mean for OC customers on a day-to-day basis?
The transition should be seamless for our customers.
- One of the reasons we had such strong customer loyalty during Chapter 11 was because we worked hard to make sure that the process did not affect Owens Corning’s superior customer service;
- Over the long-term, continued growth and innovation at Owens Corning will help us serve our customers even better.
What does emergence mean for other OC business partners on a day-to-day basis?
The transition should be seamless for all of our business partners.
Will Owens Corning continue to honor its existing business agreements upon emergence?
Yes. It remains business as usual.
Will management change upon emergence?
No. The senior leadership of the company has and will remain the same. Dave Brown will continue as President and CEO and Mike Thaman will continue as Chief Financial Officer and Chairman of the Board.
Will the composition of the board change?
The composition of Owens Corning’s Board of Directors did change as a result of agreement with our creditors. The company appointed 12 directors. The remaining four members are appointed by certain representatives of our creditors -- bondholders named two appointees and our asbestos creditors will name another two. More information about our board members is available at http://www.owenscorning.com/acquainted/governance/board.asp.
When will creditors be paid?
Secured creditors will begin to be paid on the day of emergence. Unsecured creditors will be begin to be paid approximately 45 days after emergence.

Creditor Claims

How much are creditors being paid?

Below is the estimated distribution of value included in our Plan of Reorganization. Estimated Distribution of Value (amounts in millions):

(Based on the agreement in principle reached with creditors, and assuming that the FAIR Act is not enacted into law and excluding warrants)
Creditor Group	Total Claim	Total Recovery	Percent Recovery	Form of Recovery
Admin/Priority/Convenience	133.0	133.0	100%	Cash/Notes
Bank Claims	1,475.4	2,422.6*	164.2%	Cash
Bond Claims	1,389.2	810.8	58.4%	Equity
Senior Unsecured Creditors	217.5	127.0	58.4%	Cash
Junior Unsecured Creditors	104.0	51.8	49.8%	Cash
Non-OC Senior Unsecured Creditors	73.5	105	143%	Cash
OC Asbestos Claimants	7,000	3,518.4	50.3%	Cash and Equity
Fibreboard Asbestos Claimants	3,220.0	1,458.0	45.3%	Cash and Equity
TOTAL	$13,612.6	$8,626.7

* Includes interest on bank claims.

How did Owens Corning determine who gets what and how much?

Distributions to our creditors were determined first by United States Bankruptcy Court rules, which dictate the order in which creditors are entitled to be paid. Using those guidelines, we held extensive negotiations with our creditors that resulted in this agreement.

Why are certain creditors being paid interest on their claims?

Creditors are being paid according to the mandates of the United States Bankruptcy Court, which dictates the manner in which creditors are paid. Using the court's guidelines, we held extensive negotiations with our creditors that resulted in this agreement.

How will you fund the settlement?

Owens Corning will finance payment to creditors using a combination of cash on hand, new equity and debt. Owens Corning will assume approximately $1.8 billion of post-petition debt financing to be issued on the day the plan becomes effective. 131.4 million shares of new stock will be issued.

Why didn't suppliers and other creditors who continued to do business with Owens Corning after the Chapter 11 filing receive full recovery?

When will creditors be paid?

Except where noted in the terms of the agreement, creditors will be paid on the day the confirmed plan becomes effective.

Legal Entity Restructuring

Owens Corning recently announced that it was changing its legal entity structure. What does that mean?

Currently, Owens Corning is comprised of more than 100 legal entities. Many of these entities were set up for historical tax and legal reasons. The company's assets and businesses are spread throughout these entities in ways that no longer provide Owens Corning with the best legal protections, tax benefits or business efficiencies.

Under the new legal entity structure, each of our six main business units will reside in a separate legal entity. In addition, several other legal entities will be established to handle specific operational functions, such as sales, distribution and science and technology. Employees who work in these areas will continue to operate as they do today, working closely with our business units to provide our customers with superior products and service.

There also will be a limited number of similar changes made in Canada.

Why is Owens Corning changing its legal entity structure?

As companies evolve and grow, they also must review their legal structure from time to time in order to continue to maximize legal and business efficiencies. Given that Owens Corning will be completing the Chapter 11 process by the end of the year, this is an appropriate time for Owens Corning to undertake this task. The more efficiently we are able to structure our company, the greater flexibility Owens Corning will have to continue to grow and innovate into the future.

Will the changes to Owens Corning's legal entity structure affect employees?

These changes are designed to be virtually invisible to all Owens Corning employees. Currently, we operate through many legal entities and do so in a way that means it makes no difference to employees which legal entity they belong to. This will not change. There will be no changes to pay or benefits. The change most likely to be noticed will be that the name of the new legal entity you are assigned to will be noted on paychecks beginning either late this year or early next year.

Will the changes to Owens Corning's legal entity structure affect customers, suppliers and other OC business partners?

These changes are designed to be virtually invisible to everyone we do business with. While we will need to reflect the name of the new legal entities on product packaging, contracts, invoices, and other interactions with our business partners, our products and the terms of our agreements will not change as a result of the legal entity restructuring.

When will the new legal entity structure take effect?

The new legal structure becomes effective at emergence and will be fully implemented by early January 2007.

Ongoing Business Operations

I have a multi-year supply contract with OC. Will this contract still be valid after Owens Corning emerges?

Yes. While we will need to reflect the name of the new legal entities on product packaging, contracts, invoices, and other interaction with our business partners, the terms of our agreements will not change as a result of the legal entity restructuring.

Will I need to change my invoicing information after Owens Corning emerges?

Some of our business partners will need to change their invoicing information after Owens Corning emerges. Those parties that need to do so will be notified, and we request that you update your invoicing information by the end of the year.

Will this deal affect the financial health of Owens Corning?

No. Owens Corning will be operational and financially sound when we emerge from Chapter 11. This agreement sets Owens Corning's total enterprise value at emergence at $5.858 billion, including $3.942 billion of new equity, $1.8 billion of new debt financing, $55 million from existing debt at non-debtor Owens Corning entities, and $61 million from certain tax benefits resulting from past net operating losses.

Throughout Owens Corning's Chapter 11 process, the company's business operations have remained strong. The company reported record annual sales of $6.323 billion in 2005, compared with $5.675 billion in 2004, an 11.4 percent increase from the prior year

What will Owens Corning's debt level look like post emergence?

Owens Corning will emerge from bankruptcy later this year with a strong balance sheet. At emergence, we will have less than $2 billion in debt, which translates to a debt to equity ratio of approximately 33.9 percent. We believe this level is both appropriate and manageable for a company of Owens Corning's size and scope.

What is OC's credit rating?

Owens Corning has received investment grade ratings from Standard and Poor's and Moody's, two major credit rating agencies.

Existing Owens Corning Stock

What recovery will existing shareholders receive?: Existing holders of Owens Corning common stock (which will be cancelled upon emergence) will receive warrants to purchase 5 percent of the fully diluted shares of the reorganized company, assuming exercise of all warrants but ignoring management options, at an exercise price of $45.25 per share. The warrants can be exercised within seven years of the effective date. What this means is that existing shareholders have the right purchase shares of new Owens Corning [diluted] stock at any point in the next seven years for $45.25 regardless of the price at which the stock is trading.
What is a warrant?: A warrant gives the party it was awarded to the right to buy a specific amount of securities at a specific price - called a strike price - within a specified timeframe. The warrant's exercise price usually is above the current market price at the time of issuance. In the case that the price of the security rises above that of the warrant's exercise price, then the holder of the warrant can buy the security at the warrant's exercise price and resell it for a profit. For example, in our case, existing shareholders will have warrants to buy stock at a strike price of $45.25 for seven years. That means if the new Owens Corning stock trades above $45.25, these warrants will have real economic value. Otherwise, the warrant will simply expire or remain unused.
Do you recommend the purchase or sale of stock?: The U.S. securities laws specifically prohibit management from giving investment advice. You should always consult a financial advisor before making any investment decisions.
When will Owens Corning's new stock begin to trade?: Owens Corning new stock began trading on the NYSE on November 1, 2006 under the ticker symbol OC.