Owens Corning Closes on Land for Manufacturing Plant

GRESHAM, OR-Owens Corning recently closed on a land acquisition here and broke ground for a 50,000-sf manufacturing plant that in 2005 will employ 35 people in the production of rigid extruded polystyrene foam insulation products. The Toledo, OH-based maker of fiberglass and composite materials paid $4.50 per sf for about seven acres of rail-served land at Northeast 181st and Wilkes Road in the Rockwood Industrial District, immediately east of the former Firestone industrial building.Paul Breuer of Colliers International in Portland represented Owens Corning in the transaction with George Elliott of Staubach’s Cleveland office. Mark Childs of Portland based Integrated Corporate Property Services represented the seller, Equity Advantage Inc. of Gresham, which is exchanging its proceeds into an income-producing property. The sale was contingent upon Owens Corning obtaining all the necessary permits to construct its facility.Breuer tells GlobeSt.com that Owens Corning chose the greater Portland area because it wanted to be able to serve the regional market and foam is mostly air, which means it cannot be shipped very far very effectively. As well, the company already has a support warehouse in Beaverton and a roofing manufacturing facility in Northwest Portland.The company chose its particular site in Gresham mainly because it was rail-served, but also because it allowed for yard storage without excessive screening requirements, says Breuer. Cost also was a factor, as was the sense that Gresham was a more aggressive suitor than Portland, he says. Childs tells GlobeSt.com that the cost of the land was about $0.50 per sf less expensive than land within a newer business park, such as Catellus’ nearby Southshore Corporate Park, which has more stringent screening requirements for yard storage.A rail-served site was the major driver in the deal because that is how Owens Corning will receive the plastic pallets it will melt down and turn into its rigid foam insulation product. Breuer says Owens Corning tied up the site eight months ago and ultimately needed two one-month extensions on its option before its had the necessary permits and could close the deal. “It was a typical land deal with a big corporation,” says Breuer. “It took about 18 months from start to finish.”Founded in 1938, Owens Corning had sales of $5 billion in 2003 but a net income of just $115 million. The company and 17 US subsidiaries filed for protection from creditors under Ch.11 of the US Bankruptcy Code for the District of Delaware in October 2000 to address the growing demands on its cash flow resulting from the substantial costs of asbestos personal injury liability. Last month, the company announced that an agreement in principle has been reached with the company’s asbestos creditors and the official representatives of the company’s pre-petition bondholders and trade creditors. The company now has gained support for its plan of reorganization from all major creditors except the holders of its pre-petition bank debt, who continue to oppose the plan. Among other things, the agreement in principle provides that all holders of bonds, bank debt and senior trade debt will receive a recovery equal to 38.5% of their claims upon the company’s successful emergence from Chapter 11. The company’s stock is currently traded on the over-the-counter bulletin board. Its share price is about $0.50.