4 Feb 2010

CSR split stopped by concern over asbestos fund

2:42 pm on 4 February 2010

The Federal Court in Australia has blocked plans by CSR to split its sugar business because of the potential impact on asbestos disease sufferers.

The Australian Securities and Investments Commission (ASIC) and the Asbestos Injuries Compensation Fund raised concerns about the impact of the demerger on asbestos compensation.

The fund was set up by James Hardie after its compensation trust was found in 2004 to be grossly underfunded.

CSR operated the Witenoon asbestos mine in Western Australia and manufactured asbestos building products until 1977, when the deadly effect on human health became widely known.

The ABC reports James Hardie and CSR are often co-defendants in asbestos compensation claims.

Justice Margaret Stone on Wednesday rejected an application by CSR for an order convening a shareholder meeting to vote on a demerger, meaning that the scheme of arrangement cannot proceed.

Shareholders not properly briefed - judge

CSR told the court that the board had done all it could in commissioning numerous experts to confirm that a provision of $A446.8 million should be enough to meet asbestos liabilities into the future.

However, the ASIC, the New South Wales government and Australia's other former asbestos manufacturer, James Hardie, produced expert evidence challenging those estimates.

Justice Stone said the high degree of uncertainty led her to conclude that shareholders had not been properly briefed.

She said all parties agreed that insurance estimates are inconclusive when they involve claims yet to emerge.

Asbestos-related diseases, such as asbestosis and mesothelioma, can take decades to show up after exposure.