Australia has completed a A$160 million ($158 million) loan to the state of New South Wales to help James Hardie Industries NV compensate asbestos victims after a weak U.S. housing market crimped the company’s earnings.
New South Wales will contribute an equal amount of money to the Asbestos Injuries Compensation Fund each time they draw down the loan, Prime Minister Julia Gillard told reporters today in Canberra. The advance was agreed to in November, 2009.
James Hardie, the biggest seller of home siding in the U.S., last month reported a first-half loss that widened on weaker new home starts, repairs and remodeling in the country. Interest on the loan to New South Wales, to be repaid by June 30, 2020, will be at a rate equivalent to Australia’s cost of borrowing.
“The profitability of James Hardie has been affected by the global financial crisis and that has affected its ability to make contributions into the fund in recent times,” Gillard said. “We are giving certainty to James Hardie asbestos victims that there are funds available to meet their claims.”
Payments by James Hardie into the fund are linked to the profitability of the company, according to an agreement with New South Wales, Australian Parliamentary secretary to the treasurer, David Bradbury, said in Canberra today. James Hardie made a payment of A$72 million in 2010, Bradbury said.