Hardie takes another hit

Chilean fibre cement manufacturer Industria Cementa began action against FC Volcan in 2003, claiming FC Volcan had engaged in predatory pricing.Cementa alleged FC Volcan sold products below cost when it entered the Chilean market, which is a breach of anti-trust laws in the South American country.Another Chilean fibre cement manufacturer, Quimel Sociedad Anonima, has a similar action against FC Volcan, with a decision expected next month.Because the actions were brought against the company before Hardie sold off FC Volcan in mid-2005, the Netherlands-based company has agreed to indemnify FC Volcan’s buyers, Compania Industrial El Volcan SA and Forestal Peumo SA.Hardie claims it had made provisions for the matter prior to the court decision, but will not disclose the sum, which it says will affect the company’s commercial sensitivity.The company said it was reviewing the court’s decision and its indemnification of Volcan.These latest proceedings come after Hardie announced to the Australian Securities Exchange last Thursday it would not be able to meet its payment obligations to the Asbestos Injuries Compensation Fund due to the severe housing downturn in the United States.Hardie’s ASX announcement came shortly before the Australian Securities and Investment Commission found seven Hardie directors were in breach of their duties in 2001 by publishing misleading statements in February 2000 about the company’s ability to pay compensation to asbestosis victims. ASIC told the New South Wales Supreme Court the directors had approved the ASX releases that claimed Hardie’s asbestosis compensation reserves would be self-funded. However, two years later Hardie was found to be underfunded by more than $1 billion.

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