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James Hardie settles legal action with NZ government

James Hardie settles legal action with NZ government over leaky school buildings

Dec. 24 (BusinessDesk) – James Hardie Industries, the Australian building materials supplier, settled legal action with the New Zealand government over leaky school buildings.

While the terms of the deal are confidential, Sydney-based James Hardie said in its second quarter financial statements in November that it faced potential costs of up to US$47.6 million related to a slew of leaky building claims, including provision of US$15.2 million for the New Zealand Education Ministry’s $1.5 billion class suit against cladding manufacturers.

The ministry, which oversees education policy and spending, lodged a claim in the High Court in April against cladding manufacturers that supplied materials used in school buildings affected by weather-tightness failure, seeking remediation on 800 buildings across more than 300 schools. The ministry, which manages a building portfolio worth $22 billion and spends $500 million a year on development and maintenance, has agreed to drop claims against James Hardie’s two New Zealand subsidiaries in a mutually beneficial arrangement, it said.

“This agreement strengthens the government’s ability to significantly address weather-tightness issues in our schools and support future investments in school property – without the need for lengthy court action,” Associate Education Minister Nikki Kaye said in a statement. “It will also support the ongoing manufacture of building supplies in New Zealand, which directly supports industry and jobs.”

James Hardie said the settlement won’t have a material adverse impact on its business result, according to a notice to the Australian stock exchange yesterday. The company’s shares last traded at A$12.55.

The ministry is continuing is action against other parties, including Carter Holt Harvey and CSR Building Products (NZ). It has settled more than 40 claims pursuing legal action in 2009, it said.


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