Australian Prime Minister John Howard and asbestos disease victims yesterday welcomed a compensation plan approved by shareholders of housing materials company James Hardie Industries NV.
The agreement reached on Wednesday by the company shareholders in Amsterdam limits the company's annual payments for the claims at 35 percent of its net cash flow for the previous year, with a more likely level of 10 percent depending on its financial performance in future.
Meredith Hellicar, chairwoman of the company's supervisory board, said the compensation fund was expected to last 40 years.
"The James Hardie deal in terrific news and I'm glad," Howard told reporters, taking some credit for his government in helping negotiate the agreement. He also congratulated the company, unions and victims for their contribution.
Bernie Banton, the head of the Asbestos Diseases Foundation, which represents compensation claimants, said the deal was unique in that it allowed the company, which was founded in Australia, to grow while meeting its liabilities to victims.
"It's the greatest victory in corporate Australia's history," Banton told ABC radio.
"Nowhere in the world has a template like this ever been set up and agreed to by shareholders," he said.
"So this is a template that can go worldwide; companies that have done the wrong things have now the opportunity to do the right things," he added.
Shareholders and victims of exposure to asbestos share a common interest in the company's financial wellbeing, but for different reasons.
Victims need James Hardie, once Australia's largest asbestos maker, to strengthen its business so it will be able to pay their expected claims, which could otherwise drive it bankrupt.
Shareholders, for their part, said they wanted some prospect for a reasonable return on their investment, or they would have no incentive to back the settlement.
The approval of the settlement was overwhelming, with 99.6 percent of shares voting in favor.
KPMG estimated that the total cost of the asbestos-related claims and lawsuits against the company represented at least US$4 billion.
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