1 Manville Corp. said it offered to buy $500 million of its convertible preferred stock from the Manville Personal Injury Settlement Trust in a move that would improve the trust's liquidity and reduce the potential number of Manville shares outstanding.
2 Manville said it made the offer within the past several weeks as part of an effort to improve shareholder value.
3 It said it would purchase the stock at market price.
4 Manville and a spokeswoman for the trust said that the two are discussing the proposal but a decision hasn't been made. 'We are considering that offer along with all other alternatives,' the trust spokeswoman said. 'We need to look at how to maximize our cash flow to pay our beneficiaries.'
5 The trust, created as part of Manville's bankruptcy-law reorganization to compensate victims of asbestos-related diseases, owns 7.2 million of the Series A convertible preferred shares, which are each convertible into 10 Manville common shares.
6 The trust also owns half of Manville's 48 million common shares outstanding.
7 Based on Manville's closing price yesterday of $9.25 a share, Manville's offer would purchase about 5.4 million of its preferred shares, or about 75% of the trust's preferred stock holding.
8 In addition to the stock and 20% of Manville's profits beginning in 1992, the trust is supposed to receive $2.5 billion over its 27-year life.
9 But it initially was funded with about $765 million and may soon face a cash crunch.
10 As of June 30, it had settled about 15,000 of 81,000 claims filed and its unpaid claims totaled $136 million, a large portion of its $268 million in cash and marketable securities.
11 Since most of its assets are tied to Manville, a forest and building products concern, the trust might also want to diversify its holdings.
12 As part of its offer, Manville said it requested changes in some covenants between it and the trust to allow Manville to 'reflect a more typical corporate ownership and financial structure.' A Manville spokesman wouldn't elaborate on the proposed changes.
13 But he said they are 'to a large degree, housekeeping,' although some may generate some disagreement.
14 Manville said the shares issued to the trust were intended to be sold, as needed, and that Manville has the right of first refusal to buy those shares.

Manville Corp . said it offered to buy $ 500 million of its convertible preferred stock from the Manville Personal Injury Settlement Trust in a move that would improve the trust ' s liquidity and reduce the potential number of Manville shares outstanding .
convertible preferred stock
What is convertible preferred stock?