Mercer says collapsed Fonterra silo could cost as much as $45 mln
By Paul McBeth
Oct. 27 (BusinessDesk) - Mercer Group says the collapse of a silo at Fonterra Cooperative Group's Edendale factory could cost the unprofitable stainless steel fabricator as much as $45 million.
The shares slumped 35 percent to 1.3 cents in trading today, though the statement wasn't published until just before the close of the market.
Christchurch-based Mercer said the precise cost of damage caused to property by the collapse and economic loss was still unknown. The company has professional indemnity and public and products liability insurance but couldn't say the extent to which they would cover Mercer's potential exposure.
Mercer's equipment is found in the majority of New Zealand's dairy plants, and it's been reported that four other Fonterra silos have found cracks.
The metal manufacturer, whose history stretches back to 1884 when founder James Mercer started a South Island coppersmithing and metalworking firm, has lost three-quarters of its value on the stock exchange this year, reducing its market capitalisation to $4.1 million. Shareholders at the company's annual meeting in Christchurch this month approved a plan to inject $7 million of new shareholder equity to repay debt and keep it afloat following three years of losses.