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Grace filing says indictment likely

| December 2, 2004 11:00 PM

In a bankruptcy court filing last week, W.R. Grace said it was likely that federal prosecutors would file criminal indictments sometime after Jan. 1, 2005.

In late October, Grace announced in a press release that the company had received notice from the U.S. District Attorney¹s office in Montana that it was a ³target² of a criminal investigation by a federal grand jury.

The investigation was looking into possible charges of obstruction of federal agency proceedings, violation of federal environmental laws and conspiring with others to violate federal environmental laws — all related to the companies former mining operations in Libby.

³By designating Grace as a ³target² of the investigation, the government is asserting that it has substantial evidence linking the company to the commission of a crime,² the company said in a filing with the U.S. Bankruptcy Court in Delaware. Grace understands that the investigation is at an advanced stage and that it is likely to be indicted during the first quarter of 2005, unless a resolution of this matter can be reached with the government within such timeframe.²

The company noted that ³several current and former senior level employees associated with its construction products business also have been named as targets of the investigation.

The Washington Post, in a story circulated last weekend, said the company disclosed in ³another set of court papers that three current employees and four former employees are the targets of the grand jury investigating possible Clean Air violations, obstruction of justice and conspiracy to break federal environmental laws in connection with a now-closed Libby mine.²

Grace operated a vermiculite mine in Libby from 1962 through 1990, which has been the focus of an EPA Superfund cleanup effort since 1999. The vermiculite was contaminated with tremolite asbestos. The deaths of about 190 former workers have been attributed to Grace¹s Libby operations. A community-wide medical screening of just over 7,000 people by the federal Agency for Toxic Substance and Disease Registry showed 14 percent had lung abnormalities consistent with asbestos-related disease.

Following a period of air testing, the EPA said Libby today is safe. Cleanup efforts are primarily on removal of attic insulation made from the vermiculite and garden areas where the materials were used as a soil conditioner.

On Nov. 15, the bankruptcy court granted Grace¹s request to ³advance² legal and defense costs for the employees to be indicted.

The company filed its Chapter 11 plan with the bankruptcy court on Nov. 13.

Also, Paul Norris announced on Nov. 19 that he will step down as chief executive officer on May 31, 2005 but will remain on the board of directors as executive chairman. Fred Festa, currently Grace¹s president and chief operating officer, will succeed Norris as CEO.