Spotless settles long-running dispute

Spotless settles long-running dispute over contaminated Melbourne site

July 7 (BusinessDesk) - Spotless Group Ltd. has settled a legal dispute over a contaminated site in Melbourne for A$4 million, slashing earnings this year.

The Australian dry cleaning and laundry chain, which mopped up minority shareholders of Taylors Group to become the biggest player in the New Zealand market, agreed to the settlement with the owner of a property in Barkly Street, in the Melbourne suburb of Brunswick.

Spotless had operated a dry cleaning business on a neighbouring property and chemicals had allegedly subsequently filtered across the boundary. The contamination meant a block of 49 apartments built in 2003 were never occupied and fell into disrepair.

“As part of the settlement, Spotless will provide payment of A$4 million to the plaintiff, with both parties giving full mutual releases in respect of all appeal proceedings,” Spotless said in a statement to the ASX. Spotless purchased the affected property in 2007 and is “currently preparing the site for environmental remediation.”

The settlement is the “best possible outcome for Spotless” given the plaintiff had sought about A$10 million plus legal costs, it said. Spotless won’t pay legal costs.

The company will take a one-time charge against 2010 earnings, which will erode EBIT by A$4.6 million and lop A$3.2 million off net income, it said.

Shares of Spotless dropped 1.4% to A$2.16 on the ASX. They last traded on the NZX on March 9 at $3.87. Spotless mopped up the 34% of Taylors it didn’t already own for $2.25 a share last year.

(BusinessDesk)

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