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.