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Wednesday, 5 June, 2002, 07:24 GMT 08:24 UK
Asbestos firm warns of claims risk
Cape chairman Paul Sellars
Paul Sellars: Claim warning
A UK-owned building firm, which has agreed to pay 20m to South African miners over asbestos-related claims, has warned it may suffer further payouts if bankers scupper the deal.

Cape has urged shareholders and lenders to support a compensation package agreed after a long battle with representatives of 7,500 South Africans, who claim they have suffered asbestos-related diseases.

The claimants worked for Cape before 1979, when the firm sold its asbestos mining interests in the northern Cape and other northern South African provinces.

Any reopening of the legal battle, which involved a landmark judgement by law lords, could escalate Cape's losses related to the claim, the firm warned.

"If litigation resumes... if the case is decided in favour of the claimants, there may be a materially adverse effect on the group's financial position," chairman Paul Sellars said.

"It is not possible to provide a reliable estimate of the amount or range of potential losses that could result from an unfavourable outcome."

The firm has budgeted for 4.4m in legal costs alone.

Cape is poised to send out a circular advising on latest progress in meeting "a number" of conditions relating to the agreement.

Revamp plans

The warning came as Cape reported a pre-tax loss of 32.4m last year, including an asbestos-related charge, compared with a 15.0m hit in 2000.

But the company said its chief unit, Cape Industrial Services, recorded an 11m operating profits.

And the firm announced plans for a "fundamental" restructuring, involving the sale of the manufacturing operation.

The publication of the results allowed the resumption of trading in Cape shares, which rose 1p to 21.5p in early trade.

See also:

25 Apr 01 | Business
20 Jul 00 | Africa
05 Jul 99 | The Company File
21 Mar 00 | A-B
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