USG Corporation Amends Bank Agreement - Additional Step Further Improves Financial Flexibility

CHICAGO, Jan. 8 /PRNewswire-FirstCall/ -- USG Corporation (NYSE: USG) , a leading building products company, announced today that it has amended its unsecured revolving credit facility to provide the company with additional financial flexibility. The amended facility, which is now secured, matures in 2012 and provides for revolving loans of up to $500 million based on a borrowing base determined by levels of the accounts receivable and inventory of the company and its significant domestic subsidiaries. The restrictive financial covenants in the unsecured credit facility have been replaced with a single financial covenant. That covenant, a minimum fixed charge coverage ratio, will only apply when borrowing availability under the amended facility is less than $75 million. The company's obligations under the amended facility are guaranteed by the company's significant domestic subsidiaries and secured by the company's and those subsidiaries' accounts receivable and inventory. In connection with amendment of the credit facility, the company terminated its $170 million receivables-based credit facility.

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"The amendment of our bank agreement to minimize financial covenant restrictions is the third step in our program to increase USG's financial flexibility," said USG Corporation Chairman and CEO William C. Foote. "Two months ago, in early November, we announced restructuring initiatives that will result in more than $125 million in annualized cost savings, before severance costs, and plans to reduce capital expenditures by approximately $190 million in 2009 compared to 2008. Later that month, we raised $400 million through the sale of contingent convertible senior notes. Those actions, together with the amendment to the credit agreement, greatly improve our financial flexibility as we enter 2009, which we expect will be another challenging year."

As a result of the amendment to the credit facility and the issuance of the $400 million of contingent convertible senior notes in November 2008, the company currently has liquidity in the form of cash and available borrowings of approximately $550 million, and there are no borrowings outstanding under the credit facility. Initial availability under the credit facility is more than $250 million, taking into account the accounts receivable and inventory borrowing base, outstanding letters of credit and the $75 million availability requirement for the minimum fixed charge coverage ratio not to apply. This represents an increase of approximately $165 million over the liquidity that would have been available to the company if it had retained its $170 million receivables-based credit facility but been unable to borrow under the unsecured facility because it was unable to comply with one or more of the financial covenants in that agreement. In October of 2008, the company announced that it might have difficulty meeting the minimum EBITDA covenant in the unsecured facility possibly as early as the end of the fourth quarter of 2008.

The amended credit agreement contains representations and warranties, other affirmative and negative covenants and events of default of a nature customary for credit agreements of this type. A copy of the amended credit agreement will be filed with the Securities and Exchange Commission within the next several days and will be accessible through the investor relations section of the company's web site at www.usg.com.

USG Corporation is a Fortune 500 manufacturer and distributor of high-performance building systems through its United States Gypsum Company, USG Interiors, Inc. and L&W Supply Corporation subsidiaries. Headquartered in Chicago, USG serves the residential and non-residential construction markets, repair and remodel construction markets, and industrial processes. USG's wall, ceiling, flooring and roofing products provide leading-edge building solutions for customers, while L&W Supply center locations efficiently stock and deliver building materials nationwide. For additional information, visit the USG Web site at www.usg.com.