GKN keeps up US court battle
Saturday 24 May 1997
GKN shares rallied strongly, closing 23p higher at pounds 10.07, after it emerged that the court in North Carolina had turned down an attempt to extend the action, brought by franchisees of the company's US car exhaust chain, Meineke Discount Mufflers. The final ruling, received by GKN on Thursday night, reduced the damages award by 34 per cent, from the $601m provisional order two months ago to $390m (pounds 240m).
Around a third of the 2,500 Meineke franchisees had been excluded from the claim after they reached what amounted to an out of court settlement with GKN. Earlier this month a representative told the company's annual general meeting that the excluded franchisees were planning to launch a lawsuit to join in the action, a move the judge has now rejected.
The group emphasised the damages were well within a pounds 270m provision made in March, which had slashed GKN's pounds 363m annual pre-tax profits for last year. A relieved spokesman said: "The provision we made to cover the worst case scenario does now appear to be exactly that." However GKN estimated it had already spent almost $10m on the case, mostly to cover legal fees.
GKN was found guilty before Christmas of defrauding the franchisees by diverting advertising payments to an in-house agency. The original claim was for just $31m, but the jury at last year's hearing had used their discretion to multiply the award several times, stunning the company and analysts. The saga has taken its toll on GKN's share price, which has fallen from last year's peak of pounds 11.86 before the court judgment.
The appeal was expected to take a further 18 months to complete, although a spokesman said no cash would have to be paid to the court until the conclusion. In the meantime GKN has lodged a $416m bond with the court, underwritten by several banks.
Analysts predicted that the appeal would lead to a further reduction.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...