Asbestos Law Review Reprieve For T & N

At the same time, however, the company told its investors that its trading outlook remained uncertain and some of its automotive markets were undermining its profitability.

T&N said the Supreme Court would review a decision made earlier this year to overturn the so-called Georgine system, which settles asbestos injury claims in the US.

Georgine, an administrative process approved by a district court in August 1994, has been allowed to remain in action during the legal challenge.

The Georgine settlement procedures will continue to operate until that decision is reached, a company statement said.

T&N has said in the past it believes Georgine to be a relatively predictable and financially stable mechanism for sorting and settling valid, asbestos-related health claims.

 

Without such a system, it fears a costly free-for-all.

As a result of the Supreme Court move, T&N said on Monday it expects asbestos (litigation) charges will continue to be incurred in line with those previously anticipated of around 25 million pounds ($41 million) in the second half of 1996.

Industry sources said the Supreme Court had, in effect, decided to take up T&Ns appeal against a judgement made in the Philadelphia third circuit court that had decertified Georgine.

If the Supreme Court had rejected the request, Georgine would have been formally ended 21 days after the judgement.

But the appeal means T&N can avoid a need to put aside new contingency funds in the short-term to meet a flood of claims.

And a decision by the Supreme Court is not expected for some considerable time, the company said.

T&N shares traded in heavier-than-usual volume after the announcement but prices dipped 4.0p to 125p, primarily because of an earnings warning, analysts said.

In comments alongside the announcement on Georgine, T&N said market uncertainties and an unclear trading outlook heading up to the year-end meant it was particularly difficult to assess the final outcome of the years results.

It warned that short-term operating margins on some product lines had fallen, although other product groups continued to perform strongly and on target.

The warning was the latest in a series from companies in the automotive components sector highlighting softness for supplies, particularly to manufacturers of diesel cars.

Less buoyant conditions in the heavy duty and industrial markets, combined with de-stocking in the aftermarket...has so far, kept factory output well below optimum levels, it said.

In the short term, these conditions are resulting in lower operating margins in those product groups which are most affected namely pistons, friction and gaskets, it added.