Aug 25 (Reuters) – Shares of Melrose Industries 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.
“There is still some uncertainty around potential expectation costs, but an up to $100m program for local residents gives a sense of end costs that while significant, will be manageable,” RBC Capital analyst Mark Fielding said in a note, 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.
(Reporting by Ankita Bora in Bengaluru; Editing by Nivedita Bhattacharjee)
