Kingspan has received $36 million (€27.1 million) as part of a settlement agreed with the former shareholders of Tate, the US flooring business it bought four years ago.

Kingspan's decision to accept $36 million as part of the settlement - around $4 million less than it was awarded in an arbitration process - brings to a conclusion a dispute that has dragged on since January 2001.

"This settlement ends all pending litigation as well as any assertions of wrongdoing on the part of the former Tate Global Corporation shareholders in connection with the sale of their stock," Kingspan said in a statement.

A spokesman for the Cavan-based company added that the $36 million - described as a reduction to the $120 million purchase price of Tate - would be used to reduce debt. The money has been received and booked by Kingspan in its 2004 accounts.

Following the settlement, Kingspan's debt, which was forecast to stand at around €105 million at the end of last year, should fall below €80 million. "It gives them more firepower for whatever they are planning," one analyst said yesterday.

Late last month, Kingspan - whose new chief executive Mr Gene Murtagh Jnr has just taken over the reins from his father - raised €350 million through a syndicated credit facility in a move designed to fund its future expansion.

Meanwhile, after the initial disappointment of the Tate acquisition, the company's raised access flooring business in the US is starting to show signs of improvement. The business posted a 36 per cent rise in sales in the first half, helping it return to profit.

Kingspan originally began arbitration proceedings against the Tate shareholders, including its founder and chairman Mr Daniel Baker, in 2001 after warranties given by the former owners in relation to orders in the pipeline never materialised.

In October 2003, the arbitrators awarded $40.1 million to Kingspan alongside interest of around $5,000.

The Tate shareholders filed an appeal in Pennsylvania against the outcome of the binding arbitration. While the substance of the ruling was not at issue, the appeal focused on the compensation awarded.

A US District Court subsequently upheld the $40 million award but reduced the amount of interest accruing to the Cavan-based company for delayed payment, a judgment that was again appealed by the Tate sellers.

The settlement brings an end to the dispute, taking it out of the federal courts system in the US. Market sources said yesterday that the decision was a good one for Kingspan.

"They may have got $4 million less but they have the certainty of getting the money. Otherwise, it might have dragged on," one company observer noted.

Shares in Kingspan closed 10 cents higher at €7.15 last night on a strong Irish stock market.