Melrose Industries shares rose 8% on Tuesday after the GKN Aerospace owner said it was targeting September 28 to resume full production at its Garden Grove facility and pay up to $100 million to settle damage claims from a May incident involving an overheating chemical tank. GKN Aerospace halted production in late May at a suburban Los Angeles plant after an overheating tank raised fears of an explosion and prompted the evacuation of 50,000 nearby residents for several days. A district attorney in California said late on Monday it would close its criminal investigation into the incident without bringing charges. RBC Capital analyst Mark Fielding said in a note that while there is still some uncertainty around potential expectation costs, an up to $100 million program for local residents gives a sense of end costs that while significant, will be manageable, adding that the reopening timeline was a positive clarification. Melrose said in its half-year results in July that the facility was operating at about 50% capacity, reducing sales, profit and cash flow by about 6 million pounds per month.
Melrose Industries PLCReopening timeline and manageable settlement costs positive for Melrose
Royal Bank of Canada