December 1998 Edition

Louisiana-Pacific Creates New Programs For The Siding Fund

We understand that Louisiana-Pacific has developed a new plan for paying claims on the Inner-Seal® Siding Class Action. Could you fill us in on the details? 
It seems the bad press they received from the July 24th Wall Street Journal article got the attention of CEO Mark Suwyn. The following was presented at a press release in Portland, Oregon on October 26, 1998:     
LP
In an effort to speed payments to homeowners involved in the Inner Seal® national siding class action settlement, Louisiana-Pacific Corporation (L-P) and attorneys for homeowner-members of the class action settlement, today announced a plan to get money into the hands of homeowners much faster than would be required under the original agreement. "This is good news for all claimants because it will ease concerns regarding when or whether they will be paid," said Chris Brain, one of the lead Class Counsel. "My fellow class counsel and I believe these new proposals significantly enhance the settlement and are fair and reasonable alternatives for claimants who want the certainty of prompt payment," he added.                       
The plan will accelerate the date claimants will be paid who are scheduled for the next $80 million required under the original settlement, some by several years. For claimants who elect to participate in the program, it also effectively accelerates by several years the date on which L-P must decide whether to make the two optional $50 million contributions, thus eliminating uncertainty and getting money into the hands of claimants much sooner. Moreover, L-P has agreed to put an additional $125 million into a new fund to pay current and future claimants. In the event not enough homeowners choose to opt into the new fund, L-P can elect to void it.                       
"The proposal developed by L-P and Class Counsel provides alternatives for claimants who need the certainty of prompt payment under the Settlement. These alternative proposals were developed because the funding has not kept pace with the rate at which claims have been filed. This has resulted in delays in getting money to homeowners," said Ward Hubbell, L-P's director of corporate affairs.                       
The original 1996 settlement required L-P to make mandatory payments of $275 million into a settlement fund in scheduled payments over seven years. Thus far, the company has paid $195 million of the required amount. Because claims were received faster than L-P was required to make payments, homeowners have been experiencing long delays in receiving their payments. The alternative plan consists of two new programs: an Early Payment Program (EPP) and a $125 million additional Second Fund (SF). The EPP is designed to provide immediate payment at a discount rate to current claimants slated to be paid under the original  settlement's existing mandatory funding of $80 million, as well as those in line who otherwise would be paid from the proceeds of the two $50 million discretionary payments, assuming L-P elects to make them. The $125 million Second Fund is intended for remaining claimants who have filed approved claims before December  31, 1999. Claimants electing to participate in this program will be paid a pro rata share of the fund. If L-P believes too many claimants  have elected not to participate in the Second Settlement Fund, it may withdraw its offer and decide not to participate. The alternative proposals are being offered under the supervision of Retired Oregon Supreme Court Justice Richard L. Unis, Special Master appointed by the U.S. District Court, who is overseeing the administration of the settlement. “It’s important for all claimants to understand that their participation in this new proposal is completely voluntary and that the original settlement remains in effect and unchanged," said Justice Unis. "The new alternatives are intended to remove uncertainty and promote peace of mind. They will be offered to each claimant separately and should be viewed as options which the claimants individually may or may not choose to exercise."                       
Claimants will be receiving detailed information from the independent Claims Administrator regarding the additional settlement fund options and payments in the near future.                       
"Our intent all along has been to resolve this issue as quickly and as responsibly as possible. We hope that the alternatives we've developed with class counsel will enable the homeowners who choose to accept them to move forward with their plans and get this issue behind them," said Hubbell.                       
L-P anticipates recording a charge in the third quarter of 1998 to adjust siding related reserves to reflect these enhancements to the settlement. L-P will report its third quarter earnings on October 26, 1998.                        
FORWARD LOOKING STATEMENTS
Statements in this news release to the extent they are not based on historical events, constitute forward looking statements within the meaning of federal securities laws. Forward looking statements include, without limitation, statements such as reference to the adequacy of reserves and enhancements to the national class action siding settlement. Investors are cautioned that forward looking statements are subject to an inherent risk that actual results may vary materially from those described herein. Factors that may result in such variance include changes in interest rates, commodity prices, and other economic conditions;  actions by competitors; changing weather conditions and other natural phenomenon; actions by government authorities; uncertainties associated with legal proceedings; technological developments; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward looking statements.                       
For additional information, contact Louisiana-Pacific at 503-821-5281. 
Source: Georgia Association of Home Inspectors Web Site
http://www.gahi.com/press_release_from_louisiana.htm

 Christmas


If you have a question, change of address, comment, home tip or would like to send Home Tips to your clients, send your letter to Home Tips, Christian Building Inspectors, Inc., 3697 Habersham Lane, Duluth, Georgia 30096. You can E-Mail your questions to us at rodharrison@christianbuildinginspectors.com. We reserve the right to edit questions for length. 


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