Hardie Asbestos Talks "Positive"; Update This Week
Date: 20-Dec-04
Country: AUSTRALIA
Investors would be updated on the talks this week, a company spokesman said.
A spokesman for labour umbrella organisation the Australian Council of Trade Unions (ACTU), backing A$2 billion ($1.5 billion) of claims against the company that relate to its days as an asbestos manufacturer, said ACTU was cautiously optimistic.
According to a report in the Sun-Herald newspaper, a deal is close, and will see Hardie pay an annual sum to cover the expected cost of claims for each coming year.
It said the figure would be set by an actuary, or as a percentage of the company's cash flow. Some A$200 million would be provided in advance to prevent future shortfalls.
The ACTU has said it hoped to strike a pact with Hardie over a compensation shortfall it estimates at more than A$2.0 billion, but which Hardie says is about A$1.5 billion.
"Negotiations are continuing and are going very well," Hardie spokesman James Rickards told Reuters on Sunday.
"We're all working towards the same goal," he said.
Hardie, the ACTU, and victims of asbestos-related illnesses have been negotiating for about three months to lock in compensation for up to 50 years for sufferers of mesothelioma and other asbestos-related illnesses. Mesothelioma is a cancer which slowly chokes its victims to death.
A state-government commissioned inquiry found in September that Hardie broke Australia's Corporations Law in 2001 when it misled the public about money set aside for asbestos-disease sufferers, and made the fund seven times too small.
The inquiry also said the company's assertion that the A$293 million pool was fully funded was "misleading and deceptive".
Asbestos was used in wallboard and other building materials in Australia, which has world's highest mesothelioma death rate, until it was banned in 1984 after it was found to be hazardous to health.
The Hardie compensation fund scandal that broke this year has cost two top Hardie executives their jobs, amid an ongoing investigation by Australia's securities watchdog.
Union officials have said they had hoped to resolve the matter by Christmas, though Hardie spokesman Rickards said no deadline had been set.
Asked about the likelihood a settlement would be reached before Christmas on Saturday, an ACTU spokesman told Reuters: "All we can do is express hope. We are cautiously optimistic."
Shares in Hardie, now the biggest US maker of home siding, closed on Friday at A$6.12 below a high of A$7.81 touched in Oct. 2003 before the asbestos woes emerged.
Analysts value the stock at about $9 if a pact is reached.
Analysts say the company's formula for making fibre-cement siding and other products at a low cost is virtually unrivalled in the key US market, where it earned about 85 percent of its annual sales of nearly US$1 billion last fiscal year.
But its operational strengths have been overshadowed by jitters over uncertainty surrounding asbestos, they said.
