Float faces echoes of blast in US

Click to follow
The Independent Online
Albright & Wilson, the British chemicals company which plans a £600m flotation next month, is facing a legal threat to the share issue as well as a US claim for damages of at least £300m. Richard Wern, a lawyer representing seven people who died in an explosion at the company's plant in Charleston, South Carolina, says he is seeking expert opinion as to whether his client's cases could be prejudiced by A & W's parent, Tenneco, selling thecompany.

The explosion killed nine people and injured 33 others; the company was fined $898,000 by the state authority. The blast was described in the Post Courier, the region's main newspaper, as the worst chemical disaster in the city's history. Witnesses said the blast blew clothes off employees, some of whom were caught in a fireball that engulfed the company's four-storey building.

The litigation after the explosion is first referred to on page 22 of the pathfinder prospectus issued to potential investors. The prospectus says that the explosion resulted in fatalities, and that "various property and personal injury claims were made against certain members of the Group and others".

Albright and Wilson's directors consider any payments that might arise out of the cases will not have a significant effect on the group's financial position. They maintain that whatever settlements are reached will be covered by insurers. "Obviously thiswas a very significant and regrettable incident,'' said Dr John Adsetts, the company's legal director. "But from the financial point of view it is all insured.''

In 1991 and 1992, advisers point out, the company's chemicals division's financial results were protected when the insurers paid out a business interruption insurance to cover the shutdown. They take this as an indication that they will also be supportedin the current claim.

However Mr Wern says he is surprised by the view the directors have taken. He has filed a $500m claim against A & W, Tenneco, and one of the contracting companies, on behalf of one of the people injured in the explosion, Frank Grimes. He says Mr Grimes received burns over 65 per cent of his body and has suffered brain damage as a result of the accident. The claim reflects the huge cost of medical attention for the rest of Mr Grimes's life and a substantial claim for punitive damages.

As well as the personal claims another lawyer, Richard Rosen, is trying to bring a "class action" lawsuit against the company on behalf of up to 200 residents and businesses for damages allegedly sustained in the explosion and afterwards.

Mr Rosen's attempts to bring this action are continuing even though class certification has so far been rejected in the courts. A class action, a joint action on behalf of many people, can be brought only if a judge agrees, or "certifies" it.

Mr Rosen said he thought the company was trying to say as little as possible about its problems in Charleston. "Altogether there have been three explosions here and the plant is continuing to release toxic chemicals into the environment. We want Albrightand Wilson to move their plant from here." Negotiations to settle some of the individual cases are taking place, and some claims have already been settled. The advisers to the flotation are BZW, Lazard and Freshfields.