[Federal Register Volume 67, Number 60 (Thursday, March 28, 2002)]
[Notices]
[Pages 14996-14997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7426]


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SECURITIES AND EXCHANGE COMMISSION

[File No. 22-28586]


Application and Opportunity for Hearing: USG Corporation

March 22, 2002.
    The Securities and Exchange Commission gives notice that USG 
Corporation has filed an application under Section 310(b)(1)(ii) of the 
Trust Indenture Act of 1939. USG asks the Commission to find that the 
trusteeship of National City Bank of Indiana as successor trustee 
under:
     An indenture dated October 1, 1986, between USG and Harris 
Trust and Savings Bank, a predecessor trustee, with respect to 9\1/4\% 
Senior Notes due September 15, 2001 and 8\1/2\% Senior Notes due August 
1, 2005, and
     12 indentures between USG and certain predecessor 
trustees, with respect to tax-exempt bonds listed in Exhibit A, that 
have not been qualified under the 1939 Act,

is not so likely to involve a material conflict of interest as to make 
it necessary in the public interest or for the protection of investors 
to disqualify National City from acting as trustee under these 
indentures.
    Section 310(b) of the 1939 Act provides, in part, that if a trustee 
under an indenture qualified under the Act has or acquires any 
conflicting interest described in that section, the trustee must, 
within ninety days after ascertaining that it has a conflicting 
interest, either eliminate the conflicting interest or resign. Section 
310(b)(1) provides, with stated exceptions, that a trustee shall be 
deemed to have a conflicting interest if the trustee is also a trustee 
under another indenture under which any other securities of the same 
obligor are outstanding. However, under Section 310(b)(1)(ii), 
specified situations are exempt from the deemed conflict of interest 
under Section 310(b)(1). Section 310(b)(1)(ii) provides, in part, that 
an indenture to be qualified shall be deemed exempt from Section 
310(b)(1) if:

the issuer shall have sustained the burden of proving, on 
application to the Commission and after opportunity for hearing 
thereon, that trusteeship under the indenture * * * is not so likely 
to involve a material conflict of interest as to make it necessary 
in the public interest or for the protection of investors to 
disqualify such trustee from acting as such under one of such 
indentures * * * Section 310(b)(1)(ii) (emphasis added).

Under this provision, National City's trusteeship under the indentures 
may be excluded from the operation of Section 310(b)(1) if USG sustains 
the burden of proving, on application to the Commission, that a 
material conflict of interest is not so likely as to make it necessary 
in the public interest or for the protection of investors to disqualify 
National City from acting as trustee under any of the indentures.
    In its application, USG alleges that:

    1. USG issued the 9\1/4\% Senior Notes due September 15, 2001 
and the 8\1/2\%
Senior Notes due August 1, 2005 in registered public offerings in 
the United States (Registration Statement Nos. 33-52433 and 33-
60563), and USG qualified the indenture under the 1939 Act. USG 
issued the tax-exempt bonds under indentures that were not qualified 
under the 1939 Act. The securities outstanding under the indentures 
rank pari passu with each other and are wholly unsecured. However, 
none of the indentures references any other indenture.
    2. As a result of a Resignation, Appointment and Acceptance 
Agreement, dated and effective June 18, 2001, National City 
succeeded as trustee under the qualified indenture. Under various 
other Resignation, Appointment and Acceptance Agreements that are 
listed in Exhibit A, National City has succeeded, or is in the 
process of succeeding, as trustee under the non-qualified 
indentures.
    3. As of the date of USG's application, USG is in default under 
the indentures due to its filing of a voluntary petition for relief 
under Chapter 11 of the U.S. Bankruptcy Code on June 25, 2001. The 
commencement of a voluntary case under the U.S. Bankruptcy Code 
constitutes an ``Event of Default'' under Section 6.01 of the 
qualified indenture. The commencement of a voluntary case under the 
U.S. Bankruptcy Code also constitutes an ``Event of Default'' under 
each of the non-qualified indentures. Thus, USG is in default under 
all of the indentures.
    4. Section 310(b)(1)(i) exempts an indenture from the provisions 
of Section 310(b) ``if the indenture to be qualified and any such 
other indenture or indentures * * * are wholly unsecured and rank 
equally, and such other indenture or indentures * * * are 
specifically described in the indenture to be qualified or are 
thereafter qualified.'' None of the indentures references any other 
indenture. USG asserts that the absence of these references does not 
create a risk of material conflict between the indentures where none 
otherwise exists.
    5. USG asserts that because the securities outstanding under all 
of the indentures rank equally with one another in right of payment 
and are wholly unsecured, it is highly unlikely that National City 
would ever be subject to a conflict of interest with respect to 
issues relating to the priority of payment. National City would 
neither be in a position, nor required by the terms of any 
indenture, to assert that securities outstanding under one indenture 
are entitled to payment prior to payment of claims under another 
indenture.
    6.Further, USG asserts that there are no material variations 
among the default and remedy provisions of the indentures. USG 
asserts that because of the similarity of these provisions, 
including the cross-default provisions, and the defaults under all 
of the indentures, it is highly unlikely as a practical matter that 
National City would find itself in a position of proceeding against 
USG for a default under one indenture but not another indenture.
    7. USG asserts that it is in the best interest of USG and the 
holders of the securities under the indentures that National City 
serves simultaneously as trustee under all the indentures. National 
City is not a creditor of USG and has no business relationship with 
USG other than under the indentures. National City's trusteeship 
also will allow USG to avoid the significant duplicative costs 
associated with having more than one trustee and their separate 
professionals review, understand, and administer similar indentures, 
and interact with USG and other parties in interest as USG works to 
address its present financial circumstances.

    USG has waived notice of a hearing in connection with this matter. 
Any interested persons should look to the application for a more 
detailed statement of the asserted matters of fact and law. The 
application is on file in the Commission's Public Reference Section, 
File No. 22-28586, 450 Fifth Street, NW., Washington, DC 20549.
    The Commission also gives notice that any interested persons may 
request in writing that a hearing be held on this matter. Interested 
persons must submit those requests to the Commission no later than 
April 22, 2002. Interested persons must include the following in their 
request for a hearing on this matter:
     The nature of that person's interest;
     The reasons for the request; and
     The issues of law or fact raised by the application that 
the interested person desires to refute or request a hearing on.
    The interested person should address this request for a hearing to: 
Margaret H. McFarland, Deputy Secretary, U.S.

[[Page 14997]]

Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. At any time after April 22, 2002, the Commission may 
issue an order granting the application, unless the Commission orders a 
hearing.

    For the Commission, by the Division of Corporation Finance, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.

                                          Exhibit A.--Tax-Exempt Obligations of, or assumed by, USG Corporation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Interest         Date
      Date of indenture             Description of issue           Predecessor trustee         Principal        rate        trusteeship    Maturity date
                                                                                              outstanding     (percent)       assumed
--------------------------------------------------------------------------------------------------------------------------------------------------------
12/01/84....................  Nolan County Industrial          Bank One \1\...............     $ 1,000,000         7.25         06/21/01      12/01/2014
                               Development Corporation
                               Industrial Development Revenue
                               Bonds (United States Gypsum
                               Company Project) Series 1984
                               due 2014.
08/01/97....................  State of Ohio Solid Waste        Bank One...................      45,000,000         5.60         06/22/01      08/01/2032
                               Disposal Revenue Bonds (USG
                               Corporation Project) Series
                               1997 due 2032.
03/01/98....................  State of Ohio Solid Waste        Bank One...................      44,400,000         5.65         06/22/01      03/01/2033
                               Disposal Revenue Bonds (USG
                               Corporation Project) Series
                               1998 due 2033.
08/01/99....................  State of Ohio Solid Waste        Bank One...................       9,000,000         6.05         06/22/01      08/01/2034
                               Disposal Revenue Bonds (USG
                               Corporation Project) Series
                               1999 due 2034.
07/10/99....................  Pennsylvania Economic            Chase \2\..................     110,000,000         6.00         07/13/01      06/01/2031
                               Development Financing
                               Authority Solid Waste Disposal
                               Revenue Bonds (USG Corporation
                               Project) Series 1999 due 2031.
09/01/77....................  Town of Shoals, Indiana          Bank One...................       1,000,000         5.90         08/01/01      09/01/2007
                               Economic Development Revenue
                               Bonds (United States Gypsum
                               Company Project) Series A
                               dated 1977 due 2007.
09/01/77....................  City of Fort Dodge, Iowa         Bank One...................       1,000,000         5.90         09/18/01      09/01/2007
                               Industrial Development Revenue
                               Bonds (United States Gypsum
                               Company Project) Series A
                               dated 1977 due 2007.
10/01/84....................  The Trustees of the Blaine       Bank One...................       1,000,000         7.25            \(4)\      10/01/2010
                               County Industrial Authority
                               Industrial Development Revenue
                               Refunding Bonds (United States
                               Gypsum Company Project) Series
                               1974 due 2010.
10/01/84....................  Jacksonville Port Authority      Bank One...................       1,000,000         7.25         09/06/01      10/01/2014
                               Industrial Development Revenue
                               Refunding Bonds (United States
                               Gypsum Company Project) Series
                               1984 due 2014.
09/01/98....................  City of East Chicago, Indiana    Bank One...................      10,000,000         5.50         10/16/01      09/01/2028
                               Solid Waste Disposal Revenue
                               Bonds (USG Corporation
                               Project) Series 1998 due 2038.
08/01/99....................  City of East Chicago, Indiana    Bank One...................      10,000,000         6.375        10/16/01      08/01/2029
                               Solid Waste Disposal Revenue
                               Bonds (USG Corporation
                               Project) Series 1999 due 2029.
12/01/99....................  State of Oregon Solid Waste      Wells Fargo \3\............      11,000,000         6.40         10/01/01     12/01/2029
                               Disposal Facilities Economic
                               Development Revenue Bonds
                               Series 192 (USG Corporation
                               Project) Series 1999.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Bank One Trust Company, N.A.
\2\ Chase Manhattan Trust Company, National Association.
\3\ Wells Fargo Bank Northwest, National Association.
\4\ Pending.

[FR Doc. 02-7426 Filed 3-27-02; 8:45 am]
BILLING CODE 8010-01-P