Kingspan legal defeat knocks spots off firm's share price
Insulation products company Kingspan last week announced an eight per cent increase in sales for the first four months of the year to €473m. However, news of the increase didn't cut any ice in the market, with shares ending the week down almost two per cent.
The news came in advance of Kingspan's AGM last Thursday. The firm also refinanced its borrowings, finalising a new €300m borrowing facility (which remains undrawn) on April 27 and a $200m (€154m) private placement last August. The average maturity of Kingspan's borrowings has now been extended to 5.4 years.
The tepid response of the markets to the Kingspan sales increase is probably explained by the defeat it suffered in its legal battle with Austrian plastics firm Borealis. Kingspan had sued Borealis in the London High Court, seeking €49m in damages to cover the cost of replacing faulty oil and water tanks it had manufactured with polyethylene supplied by Borealis.
The judge rejected Kingspan's claim, ruling that it had not proved that the raw material supplied by Borealis was responsible for the failure of the tanks.
While the Borealis ruling means that Kingspan will not receive any legal windfall, sources close to the company point out that the tanks in questions were manufactured in 2002 and 2003 and that the cost, a total of £25m (€31m), of replacing them had already been fully provided for.
However, the company's 2002, 2003 and 2004 annual reports make no mention of problems with fuel tanks, while the 2004 Kingspan report speaks of a "robust performance" from its environmental containers business, at the time headed by current CEO Gene Murtagh.
Sunday Indo Business