Monday 4th March 2019
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Stainless steel products manufacturer Mercer and its insurers have settled all potential claims associated with the collapse of a silo at Fonterra’s Edendale site in 2016, the company said in a release to the stock exchange.
The terms of the full settlement are confidential but Mercer will pay Fonterra $1 million and undertake $3 million of work over a three-year period at a discounted rate, it said. Mercer is agreeing to the above without any admission of liability to Fonterra or any other party, according to the statement.
The company's Mercer Stainless division designed and supplied a silo to TetraPak that collapsed at Fonterra's Edendale factory in September 2016.
At the time, Mercer said it had professional indemnity and public and products liability insurance but that cover would depend on the findings of the investigation and the extent of its liability, if any, as well as the amount of cover and any relevant exclusions.
Mercer chief executive Richard Rookes was not immediately available for comment but Mercer in November 2017 estimated the cost of the collapse to Fonterra was $20 million.
Last week the company said it had returned to profitability with a skinny $227,000 net result in the first half with revenue rising 10 percent to $18 million.
Its stainless business had “adequate” revenue of $8.9 million and earnings before interest, tax, depreciation and amortisation of $656,000 with its performance driven by investment in the dairy sector “while the business did not win as much work in the wine sector as last year, based on a highly competitive pricing environment.”
It says the cyclical nature of the stainless sector “continues to be a challenge and, despite a continued effort to diversify, Mercer Stainless is still largely reliant on the dairy sector.”
The stock was recently trading up 9.1 percent, or 2 cents, to 24 cents.
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