Australia Government Provides A$320 Million Bailout for James Hardie's Asbestos Fund

Australia's Prime Minister, Kevin Rudd, and New South Wales (NSW) Premier, Nathan Rees, announced a A$320 million bailout for James Hardie's fund for asbestos victims. This emergency loan will be repaid and does not excuse the company from its obligations to the fund. The loan will provide temporary relief to the fund, which has been struggling due to the sharp downturn in the US housing market. However, the governments and organizations involved have emphasized that this loan does not release James Hardie from its responsibility to contribute to the Asbestos Injuries Compensation Fund (AICF) in the future.

Key Takeaways:

• The Australia government provided a A$320 million bailout to James Hardie's fund for asbestos victims, with the NSW government contributing an equal amount.
• The loan will be repaid by James Hardie by 2020, as per the agreement between the governments and the company.
• The loan will cover three years of compensation payments to asbestos victims, but does not excuse James Hardie from its ongoing responsibilities to contribute to the AICF.
• James Hardie is required to contribute 35% of its "free cash flow" to the AICF annually, but has struggled to meet this obligation due to the downturn in the US housing market.
• The loan was welcomed by Karen Banton, wife of deceased asbestos victim Bernie Banton, but she also emphasized the need for James Hardie to continue fulfilling its responsibilities to the fund.
• Unions NSW commended the government's action, but vowed to keep pressure on James Hardie to make future payments to the fund.
• Slater & Gordon executive director Ken Fowlie praised the interim solution, but emphasized that James Hardie must continue to pay into the fund when economic conditions improve.

Statistics:

• A$320 million: Value of the bailout loan provided by the Australia government for James Hardie's fund for asbestos victims.
• A$160 million: Amount contributed by each of the Australia and NSW governments to establish the loan facility.
• 35%: Annual contribution rate of James Hardie to the Asbestos Injuries Compensation Fund (AICF) as a percentage of its "free cash flow".
• 2020: Target year for James Hardie to repay the bailout loan.
• 40 years: Duration of the agreement requiring James Hardie to contribute to the AICF.
• 1,000: Estimated number of new asbestos sufferers seeking compensation in the three-year period covered by the loan.

Sources:

• "Australia PM unveils 320m dollar bail-out for asbestos fund." Asia Pulse, November 9.
• "James Hardie to repay asbestos fund loan." ABC News, November 9.
• "Unions welcome bailout but vow to keep pressure on James Hardie." Unions NSW, November 9.