T&N warns on pounds 50m asbestos claims
Friday 30 August 1996
The news yesterday sparked renewed fears that the group, which formerly as Turner & Newall was one of the world's biggest asbestos manufacturers, could face a flood of legal claims. Along with the announcement of lower than expected profits yesterday, the shares dropped 8.5p to 135p.
The potential new charge, which would double this year's provisions for asbestos, stems from May's decision by the Third Circuit of the US Court of Appeals that the so-called Georgine settlement, reached in 1994 between asbestos victims and 20 asbestos companies, failed to meet the criteria of a class action.
The companies, grouped under the Center for Claims Resolution, have appealed to the US Supreme Court, but Sir Colin Hope, the T&N chairman who is to drop his executive duties, warned yesterday that if the court declined to hear the appeal "Georgine will fall away in seven days".
He believed they had the basis of an appeal, given that other courts had come to a contrary conclusion. If the Supreme Court gave the green light, it is likely to hear an appeal in the middle of next year. "In the meantime, there is a bow wave of cases of individuals who are ready to turn their cases into tort cases if Georgine falls away."
Many of them were likely to prove "questionable", he said, but T&N would still have to make an additional provision. "Our best estimate is that by October, we would need an extra pounds 50m on costs, but I would stress that is a best guess, not a forecast."
The comments came as T&N reported a slump in profits from pounds 73.2m to pounds 58.1m in the six months to June, hit by destocking costs and redundancy charges.
Investment Column, page 16
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