Hi Nik;
A week or so ago I posted a msg about JHX saying that I couldn’t see any sense in the share price jump that happened after the Jackson report was made public. I hope they find their way back to prosperity too, if only because that’s the best way to ensure that the victims are paid, but the road looks very rocky to me. I stress that this is personal opinion, not advice.
It’s true that the report said “no legal liability”, but that was the case for cigarette companies too until recently. Like them, James Hardie has a record of denying that its product was harmful when they knew that it was, and then they went into this sleazy-looking arrangement to avoid paying compensation without actually saying so. The company might (only might, IMO) stay out of the courts in this country, but the political, union, and public pressure is unlikely to go away and it’s already moving overseas. There were protests (which alone don’t achieve much but which happened mighty fast) at the AGM in the Netherlands. And just this morning I heard a report that lawyers in the US are looking at the compensation issue. If the company gets caught up in the US courts, then it faces unknowable legal costs there in addition to its unknowable compensation liabilities here. (As far as I know their products in the US, which is now the largest part of its business and the source of its major growth prospects, were not asbestos based and there isn’t a product liability issue in the US.)
As I said, I hope Hardies gets through this and again becomes a company people can be proud to work for as well as happy to own. I wouldn’t bet my retirement on it though.
Ghoti
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