Court favours Kingspan

BUILDING materials group Kingspan moved closer to getting a $41 million (€34m) payout yesterday when an American court upheld a finding against the former owners of its American floor-making subsidiary.

The finding, by the US District Court in the north-eastern state of Pennsylvania, agreed with a decision by independent arbitrators last year that Kingspan was entitled to compensation. The arbitrators said key information was not passed on to Kingspan at the time it bought Tate for $120m (€98m) in early 2001.

Kingspan took a case for breach of contract and common law fraud against Tate's previous owners after the new business's performance failed to match expectations.

The arbitrators' decision was legally binding on both parties, but was referred to the courts after being queried by Tate's former owners.

Davy analyst Florence O'Donoghue said the lump sum would strengthen Kingspan's balance sheet by allowing it to repay debt. This would bring the overall debt burden below €100m, said Mr O'Donoghue. NCB analyst John Sheehan said the award was worth between 20c and 23c per share and could pave the way for a special dividend within the next six months. Kingspan shares were yesterday down 4 cents to 4.80 but have risen 15% since the start of the year.

But Kingspan faces further obstacles before getting the money.

The vendors, which include former Tate president Daniel Baker, will appeal the decision to a higher court in a move which could add months to the process. They have also been instructed to provide a bond that will guarantee payment of the full amount of the award if the appeal is unsuccessful. Kingspan will also be entitled to extra interest of over $2000 (€1630) per day to compensate for the delay in payment.

Tate provides raised access floors for office buildings and data centres used by companies with large-scale requirements for cabling.