Wed, Jun 28, 2017 - Page 10 News List

Firm pulls panels used on tower

FLAMMABLE:Lawyers said Arconic could face lawsuits for supplying panels used in London’s Grenfell Tower, as its brochures warned of a fire risk for tall buildings

Reuters, NEW YORK

Arconic Inc on Monday said it would stop global sales of plastic-filled aluminum cladding panels for use in high-rise buildings after a fire in London’s Grenfell Tower, which used those Arconic panels, killed at least 79 people.

Shares of the company, formerly a part of Alcoa, fell as much as 11.3 percent after reports on Saturday showed it had supplied the cladding knowing it would be used at Grenfell Tower, despite warning in its brochures those specific panels were a fire risk for tall buildings.

Lawyers told reporters that Arconic could face lawsuits on both sides of the Atlantic over its role in the fire, including claims brought by those affected by the fire and families of those killed, although the extent of the company’s legal liabilities was not clear.

Arconic did not immediately reply to a request for comment on potential legal action.

Announcing the end of sales of the panels for tall buildings, Arconic cited “inconsistencies in building codes around the world” and code compliance issues that have arisen concerning use of cladding systems as a result of the Grenfell Tower fire.

British authorities said the use of the panels in Grenfell Tower was in breach of UK building regulations.

Arconic declined to comment on whether the material met UK building regulations, saying it was for local contractors and officials to decide whether its materials were suitable and consistent with local regulations.

Other companies involved in the refurbishment of the building in which the Arconic cladding material was fitted said they complied with all local rules.

Nonetheless, Arconic advised in one brochure that combustible cladding materials were a fire risk in tall buildings and that above 30m noncombustible materials should be used.

Its polyethylene panel material is combustible. Grenfell Tower is more than 60m high.

“The issue is they supplied material that was used above their own marketing material’s suggested limit,” Seaport Global Securities analyst Josh Sullivan said. “The concern is around the ultimate liability. You have one of the largest fires in UK history and they’re searching for somebody to be at fault.”

The stock clawed back some losses after Monday’s announcement and was down 6 percent at US$24.01 at the close as more than five times the usual number of shares changed hands. Arconic’s junk bonds fell by up to 2.5 points.

Arconic was created last year as Alcoa’s specialty metals business, while the bauxite and aluminum businesses were split off under the Alcoa name. Last month Arconic emerged from a bruising battle with activist investor Elliott Management, during which its chief executive resigned.

The reports on Saturday cited six e-mails from 2014 between Deborah French, British sales manager at Arconic — then called Alcoa — and executives at the contractors involved in the bidding process for Grenfell Tower’s refurbishment contract.

These showed Arconic knew it was supplying for a building called “Grenfell Tower,” but not whether the company knew the building’s exact height.

The company declined to say if it knew this.

Lawyers told reporters that plaintiffs could argue the company acted negligently by supplying material it knew was flammable.

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