Kingspan awarded $40m in Tate ruling

Building materials group Kingspan has won more than $40 million (€33.87 million) in compensation over irregularities relating to the purchase three years ago of the US raised-flooring business Tate Global.

The ruling follows binding arbitration in the US between the Cavan-based group and the US former owners of the business.

The $40,113,735.58 award far exceeded the most optimistic forecasts and analysts.

In addition, the American Arbitration Association made Mr Daniel R Baker, the founder and former chairman of Tate, and the other sellers liable to interest of $5,354.79 per day, backdated to September 19th.

Lawyers for Kingspan were yesterday in court filing a motion for final judgment in the affair.

Chairman Mr Eugene Murtagh welcomed the judgment. "We are delighted that the binding arbitration case has been resolved in favour of Kingspan and felt that the result vindicates the decision to proceed with the case," he said in a statement.

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

The award is worth the equivalent of 21 cents per share. Yesterday, the stock closed 23 cents higher at €3.68, having hit €3.80 earlier in the day.

Analysts said the money was likely to be returned to shareholders through the payment of a special dividend, although it could also go to pay down relatively low debt or pursue capital investment.

Kingspan bought Tate for $120 million at the end of 2000. The deal quickly soured, however, and in early 2002 it initiated arbitration proceedings against the former owners over warranties they had given relating to orders that never materialised.

The arbitration process has taken far longer than expected to reach a conclusion and analysts had long since decided that any award would be for a fraction of the sale price.

"This award is well ahead of expectations," said Goodbody analyst Mr John Sheehan, who said the industry had been working on the basis that any finding would be anywhere between $5-$15 million.

Mr Flor O'Donoghue, analyst with company broker Davy, said: "The favourable judgment provides a boost to management's reputation that was damaged when Tate significantly impaired the group's performance."

Sales at Tate fell 75 per cent after it was acquired but the company has worked hard to cut costs. "Tate is no longer bleeding cash," said Mr Sheehan. "We expect it to make a modest loss this year and it should break even in 2004."