Fletcher Building Ltd has settled a dispute relating to the previously acquired Formica business, releasing $US12 million ($NZ16 million) of funds held in escrow to the building firm.
When Fletcher Building acquired Formica in 2007 from private equity firms Cerberus Capital Management and Oaktree Capital Management for $US700m, it agreed to pay up to $US50m if certain cost saving initiatives were implemented.
Fletcher Building paid $US28m in milestone payments relating to two of the five initiatives. Of this, $US18m has been held in escrow, and $US10m was paid to Cerberus.
The balance of $US22m was not paid, as the other three cost-saving initiatives were disputed. It is this dispute which has now been settled.
Fletcher Building said that under the settlement, it will receive back $US12m of the $US18m of funds held in escrow and Cerberus will receive $US6m.
No further payments will be made by either party and all claims and counter claims are now terminated. There was no admission of liability by either party.
The Formica acquisition coincided with a significant downturn in the US residential market, which historically represented approximately 20 percent of Formica sales.
Formica Group has more than 3200 employees in 11 manufacturing and 27 distribution facilities across Asia, Europe and North America.
