The banks have signed on, but what about the bondholders? After months of talks, USG on Dec. 31 won bank approval of a restructuring plan that includes debt rescheduling, the sale of USG's DAP subsidiary, and a possible debt-for-equity swap.
The deal buys time for the building products giant, which will retain more than $100 million in cash to pay trade creditors. But to avert a potentially ruinous creditor revolt, new USG Chairman Eugene Connolly will still have to sell his plan to holders of $979 million in junk bonds. The bonds were issued in 1988 as part of USG's successful attempt to ward off a hostile takeover.