Kingspan, the Irish insulation producer, is anticipating a conclusive verdict within a few months relating to an investigation by the European Commission into allegations that it wilfully or carelessly deceived competition authorities regarding its now-defunct attempt to acquire Trimo, a Slovenian competitor.
The enterprise, which is based in Cavan, has revealed concurrently with the €750 million bond sale it issued last week, that it has yet to reserve any assets in anticipation of a potential penalty resulting from the inquiry.
The company stated in the bond prospectus, “We expect a final verdict from the EC (European Commission) in late 2024 or early 2025, and the enterprise retains the right to challenge the judgement through the European court system.”
Although the EU can levy fines worth up to one per cent of a corporation’s income for contravention of European merger laws, Kingspan has mentioned that previous instances are rare, making the consequence or possible penalty unpredictable.
In April 2022, Kingspan withdrew its plan to purchase Trimo, a producer of roofing and insulation materials, inviting a commission examination into the intended acquisition’s prospective influence on competition across various insulation panel industries.
The commission initiated an inquiry in November to ascertain if Kingspan had presented inaccurate, incomplete, or misleading information during its initial evaluation of the acquisition’s probable impact on competition. In March, the commission declared a preliminary assumption that Kingspan had “deliberately, or carelessly, furnished inaccurate, deficient, and misleading information” regarding basic facts.
The firm, under the leadership of CEO Gene Murtagh, has objected to the EC’s preliminary judgements and asserts thorough cooperation in a section of its prospectus outlining ‘legal and regulatory risks’.
Moreover, Kingspan’s involvement in a UK public inquiry into the 2017 Grenfell tower fire in London, which resulted in 72 fatalities, was underscored. During a refurbishment in 2016, approximately 5% of the plastic foam insulation layer of the tower’s external cladding included Kingspan’s Kooktherm K15 insulation board, without the company’s knowledge.
Though the final examination report, issued in September, did not hold the Irish team accountable for the intensification of the fire, it noticeably stated that Kingspan has ‘deliberately’ fostered an ‘unreal market’ for the insulation board, employed “underhand tactics”, and exhibited an ‘utter indifference to fire safety’.
The group, despite not being deemed by the inquiry as the instigator of the disaster, has accepted several past mistakes made within a sector of the relevant subsidiary’s business, which the group has since thoroughly addressed, according to the bond document.
However, there’s no guarantee that the results of the inquiry, negative media attention, or industry commentary in the aftermath of the inquiry won’t adversely affect the group or trigger further investigations, lawsuits, regulatory actions, or other legal proceedings, the document warns.
Kingspan’s debut bond sale sparked interest from investors, who oversubscribed for more than 4.5 times the €750 million of notes available. The notes were valued to command a fixed coupon, or interest rate, of 3.5 per cent and will reach maturity in seven years.