UK: Grenfell Tower victims must be protected in buyout of cladding co linked to fire, MPs demand

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Article
2 December 2018

MPs issue Grenfell warning over Arconic buyout

Author: Financial Times

British politicians have warned Arconic and its largest shareholder, Elliott Management, that they will oppose a takeover of the company if it does not protect the interests of victims of the Grenfell Tower blaze. Seventy-two people died and 200 households were displaced in the fire..., which was linked to flammable cladding supplied by a subsidiary of Arconic...

A consortium of two private equity investors, Blackstone and The Carlyle Group, has been trying to buy the aluminium products maker, while a third, Apollo Global Management, is working on a solo bid.  Elliott is in discussions with both groups about ways of managing the potential liabilities, according to people with knowledge of the talks...

“[P]roposals in no way contemplate limiting the ability of the company to meet any obligations that may arise from the Grenfell tragedy,” said one of the people... There has been no finding of fault against Arconic... The company has said it did not “control the overall [cladding] system or its compliance [with building regulations]”...

Analysts say a deal for Arconic could be sealed within weeks if investors’ fears about the potential Grenfell liabilities can be overcome. But the UK government this week added to the uncertainty surrounding the scale of those liabilities, by giving local councils the power to strip dangerous cladding from privately owned buildings and bill the owners for the repairs...

The UK government declined to comment on the Arconic deal and Elliott’s efforts to resolve the issue of potential liabilities.

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Article
29 November 2018

Elliott steps in to boost Arconic's sale process

Author: Reuters

Elliott Management Corp, the activist hedge fund that sits on Arconic Inc’s board, is working to address potential liabilities weighing on the sale process for the U.S. aluminum products maker, according to people familiar with the matter...

The potential legal liabilities stem from Arconic’s building and construction systems division, which makes facades, windows and framing products. Its Reynobond PE panels were used in the cladding of the London’s Grenfell Tower apartment complex, where more than 70 people were killed last year in a blaze...

Elliott has proposed a structure that would place liabilities of Arconic’s cladding business in a separate entity, the sources said. The technique, called ringfencing, has been used by other industrial conglomerates seeking to limit exposure to similar legal claims, the sources added...

The sources asked not to be identified because the matter is confidential... Elliott and Apollo declined to comment.

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