Irish insulation maker Kingspan expects a final decision within months on the European Commission’s investigation into claims it intentionally or negligently misled competition regulators during their assessment of its now-abandoned bid for Slovenian rival Trimo.
The Cavan-based company also disclosed, in documents related to its sale last week of €750 million of bonds, that it has not yet set aside any provisions for a potential fine stemming from the investigation.
“A final decision from the EC (European Commission) is expected in late 2024 or early 2025, and the group will have the right to appeal the decision via the European judicial system,” it said in the bond prospectus.
While Brussels can impose fines up to 1 per cent of a group’s turnover for breaches of EU merger rules, the company noted “there are few precedent cases, making it uncertain what the outcome or potential fine might be”.
Kingspan dropped plans to buy roofing and insulation materials manufacturer Trimo in April 2022, which had triggered a commission investigation into the deal’s potential impact on competition in several insulation panel markets.
The following November the commission opened an investigation to determine if Kingspan had supplied incorrect, incomplete or misleading information to its original examination of the deal’s likely implications for competition. The commission said in March that it had taken the preliminary view that “Kingspan intentionally, or negligently, provided incorrect, incomplete and misleading information” about basic facts.
Kingspan, which is led by chief executive Gene Murtagh, said in a “legal and regulatory risks” segment of its prospectus that it has “stated publicly that it disagrees with the EC’s preliminary views and that it fully co-operated with the EC”.
The same section also highlighted Kingspan’s involvement in the UK public inquiry into the 2017 Grenfell tower fire in London in which 72 people died. The company’s Kooktherm K15 insulation board was used on about 5 per cent of the plastic foam insulation layer of external cladding of the block, unknown to the company, during a refurbishment of the London tower that was completed in 2016.
Although the final inquiry report, published in September, exempted the Irish group from responsibility for the spread of the fire on the night it variously found that Kingspan had “knowingly” created “a false market” for the insulation board, had used “dishonest strategies” and had shown “a complete disregard for fire safety”.
“Although not found by the inquiry to be causative of the tragedy the group has acknowledged certain historical failings that occurred in part of the business of the relevant subsidiary, which the group has since comprehensively addressed,” the bond document said.
“There can be no assurance that the findings of the inquiry, negative press or industry sentiment following the inquiry will not negatively impact the group or lead to the group being the subject of additional investigations, litigation, regulatory responses or other legal proceedings,” it said.
Kingspan’s first bond sale secured demand from investors for more than 4½ times the €750 million of notes on offer. The notes were priced to carry a fixed coupon, or interest rate, of 3.5 per cent and will mature in seven years’ time.
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