This is Dow Corning's statement on the petition it filed for Chapter 11 protection from liability lawsuits over its involvement in the manufacture of silicone breast implants.

Corporate News


DATE: May 15, 1995

FOR IMMEDIATE RELEASE

DOW CORNING VOLUNTARILY FILES FOR CHAPTER 11

Midland, MI, May 15, 1995--Dow Corning corporation today

announced that it has voluntarily filed for protection under

Chapter 11 of the United States Bankruptcy Code with the

United States Bankruptcy Court in Bay City, Michigan.



In announcing today's Chapter 11 filing, Dow Corning's

management emphasized that its underlying business remains

strong and that is customers will not be directly affected by

this action. "Dow Corning will continue to supply products to

our customers, and compensate our suppliers and employees as

we have in the past," explained Richard A. Hazleton,

Dow Corning chairman and chief executive officer. "We decided

to take this action while we are in a position of financial

strength, with the cash to continue operating our business

without disruption.



"We now believe this is our only reasonable choice for

four principal reasons. First, attorneys with lawsuits

outside of the global settlement have not reduced their

exorbitant demands, threatening our long-term business and,

therefore, our ability to fund the global settlement. Despite

the scientific evidence showing no link between implants and

disease, we were faced with preparing for nearly 200 cases in

the next 6 months. This represented a potentially enormous

financial and management drain which threatened our business.

Our Chapter 11 filing immediately stops all lawsuits against

the company," Hazleton explained.



Second, when we file our financial reorganization plan,

we hope to preserve our participation in a local settlement,

to which we have agreed to contribute $ 2 billion. Even so, we

are concerned about the settlement, since many are calling for

hundreds of millions or even billions of more dollars and are

predicting thousands of additional lawsuits. We are

continuing discussions with global settlement attorneys to

reach a satisfactory agreement. But, we have consistently

said that we cannot both fund the global settlement and afford

large numbers of lawsuits outside of the settlement,"  Hazleton

said.



"Third, several recent credit rating downgrades have

confirmed the financial community's long-term concerns about

the lack of a certain and predictable financial resolution to

this controversy. This understandable concern is in spite of

the underlying strength of our business, which the ratings

agencies understand. The Chapter 11 process will provide

closure by resolving all breast implant financial claims,"

Hazleton explained.



"Finally, some of our insurance carriers have not

accepted their responsibility to commit to pay their share of

the more than $1.5 billion which we believe they will owe us.

As of March 31, 1995, we had received less than $100 million.

We believe we will eventually be reimbursed, but we are not

satisfied with our progress," Hazleton said.



"This was a difficult decision," explained Hazleton. "We

carefully considered what effect this would have on our

customers, employees, suppliers, and communities,  well as

women who have our implants. In our judgment, the current and

evolving circumstances surrounding the breast implant

controversy reached the point that we had to take this action

now to preserve both the fundamental strength of our business

operations and our ability to fairly compensate all women with

breast implant claims.



"We are disappointed that our efforts to resolve this

controversy without resorting to a Chapter 11 filing were not

successful. We negotiated a $4.25 billion global settlement,

including $2 billion finding from Dow Corning over 30 years.

We argued or case in court with a good deal of success. We

also committed more than $30 million in additional research to

address the remaining questions women have about their

implants, and we funded an implant removal reimbursement

program for women who wanted to have their implants removed

but lacked the financial means to do so," Hazleton aid.



"Research has not shown a link between breast implants

and the diseases alleged in lawsuits. Research from

prestigious institutions like Harvard University, Mayo Clinic,

Johns Hopkins, the University of Michigan and others has

consistently found that women with implants are no more likely

to contract disease than women without implants. In fact,

recently, both the French and British governments have

reviewed the available research and concluded that women with

implants face no greater risk of developing autoimmune disease

than the general population, Hazleton stated.



"Our focus now will be to maintain our strong business

momentum by continuing to meet our customers' needs. We also

intend to work closely with our key creditors and the creditor

committees once they are appointed to complete our financial

restructuring and emerge from Chapter 11 as soon as possible,

although the entire process will probably take two years or

more. We have started this process by filing motions today

with the court that will minimize any disruption to our normal

day-to-day operations," Hazleton explained.



"We at Dow Corning deeply appreciate he outstanding

support we have received from our customers, employees,

suppliers, business and financial partners, and communities

throughout this controversy. We intend to demonstrate that

their confidence in us has been well placed by supplying

quality products and growing our business throughout and

following this Chapter 11 proceeding," Hazleton concluded.



Dow Corning Corp., a global leader in silicon-based

materials, is a Michigan corporation with shares equally owned

by The Dow Chemical Co. and Corning Inc. More than half of

Dow Cornings sales are outside the U.S.