US panel awards Kingspan $40m

KINGSPAN Group, the largest Irish maker of flooring and insulation boards, has been awarded $40.1 million (€33.9 million) in damages in a major US judgment.

The group’s shares hit a year’s high after the news broke and further price gains are on the cards, said Davy Stockbrokers in a two-page analysis of the judgment.

The $40m award has been made on the back of the purchase in 2000 of the Tate Global Corporation.

Kingspan was granted the sum by the American Arbitration Association in Washington. Under the settlement, it will also receive interest of $5,354 a day from September 19.

The deal for Tate was finalised for $120m in cash and debt in January, 2001.

In March this year Kingspan raised public concerns about Tate, describing its performance ever since acquisition as “extremely disappointing”.

It hinted also at more serious problems in the US group adding it had to “wrestle with unforeseen problems” since it signed off on the deal in 2001.

Former Tate president Daniel R Baker and the other sellers of the US company were ruled to have breached the terms of the contract with Kingspan.

They were also found guilty of common law fraud and of federal and Pennsylvania securities’ law violations, Kingspan said. A panel of arbitrators of the American Arbitration Association in Washington, DC, US said that its findings are binding on the vendors.

Chairman and chief executive of Kingspan Eugene Murtagh has welcomed the ruling and Davy Stockbrokers said that the finding would have significant benefits for the share price.

Mr Murtagh said: “We are delighted the binding arbitration case has been resolved in favour of Kingspan, and feel that the result vindicates the decision to proceed with the case.

“Our lawyers will move to immediately enforce the judgment,” he said.

Davys in a two-page assessment of the group’s outlook now said:

“The favourable judgment provides a boost to management’s reputation that was damaged when Tate significantly impaired the group’s performance and rating post acquisition.

“Not surprisingly, the stock recorded a gain this morning, which is well deserved and the news helps the group’s potential for a further re-rating,” it said.

Shares rose 23 cents to €3.68 in Dublin yesterday to reach their highest rating this year.

In 2001 before the negative impact of the US deal started to impact on the group the shares hit a five-year high of €4.80.

The shares hit a five-year low last year of €1.35.