(Bloomberg) -- James Hardie Industries NV’s fund to compensate asbestos victims may be unable to pay all claims within two years after the U.S. housing recession trimmed the company’s earnings for six straight quarters.
James Hardie, the biggest seller of home siding in the U.S., isn’t likely to contribute to the fund in the year ending March 31, 2010, as the worst economic slump since the Great Depression weighs on U.S. home sales, the Netherlands-based company said today. The Australian-based fund may be forced to pay victims in installments rather than lump sums.
It’s the second time a James Hardie fund has run short of money to compensate asbestos victims. A New South Wales state court today found former board members misled investors over the cost of compensating people sickened by asbestos, which the company used in its products for more than 60 years.
“Nobody expected the U.S. downturn to be as severe as it has been,” Dallas Booth, chief executive officer of the Asbestos Injuries Compensation Fund Ltd., said in a phone interview. “We think we’ve got around two years of funding available in the trust.”
James Hardie fell 4.5 percent to A$4.26 at 1:47 p.m. in Sydney on the Australian stock exchange. The stock has fallen 29 percent in the past year.
Court Case
The entire 2001 board of James Hardie approved a press release containing misleading statements about asbestos compensation, the New South Wales supreme court found today, the Sydney Morning Herald reported on its Web site. The court will hold a further hearing to determine whether seven former executives have any reason to be excused from being declared to have broken the corporate law, the report said.
“We are still working our way through the findings and are unable to comment further at this stage,” Sean O’Sullivan, a Sydney-based spokesman for James Hardie said today by phone.
The company started using asbestos in Australia in the 1920s. The fibrous mineral, used to make brake pads and fiber cement sheets for housing, has been linked to lung cancer and mesothelioma, a form of cancer affecting the chest or abdomen. James Hardie began to phase out blue asbestos in 1968 and all products were asbestos-free by 1986.
The U.S. housing market has plunged more than 75 percent from its peak in early 2006, James Hardie Chief Executive Officer Louis Gries said today in the statement. The company got about 75 percent of its net sales in the first nine months of fiscal 2009 from the U.S., he said.
“The trust fund can only spend the monies that it has available,” Booth said. “We are certainly hopeful that with the turn around James Hardie will be in a position to resume payments at a level which will be sufficient.”
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Wednesday, April 22, 2009
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