By Sinead Carew
| NEW YORK
NEW YORK Arconic Inc said on Monday it was stopping global sales of its Reynobond PE cladding for use in high-rise buildings after a fire in London's Grenfell Tower, which used those Arconic panels, killed at least 79 people.Shares of the company, formerly known as Alcoa, fell as much as 11.3 percent after Reuters reported on Saturday it had supplied the PE cladding for Grenfell Tower, despite warning in its brochures those specific panels were a fire risk for tall buildings.Arconic cited "inconsistencies in building codes around the world" and code compliance issues that have arisen concerning use of cladding systems as a result of the Grenfell Tower fire.It said it would continue to support UK authorities as they investigate the June 14 fire.
The stock clawed back some losses after Monday's announcement and was down about 4 percent at $24.46 in midday trading. The volume of shares changing hands was almost four times the 10-day moving average in just the first three hours of trading.The Reuters report on Saturday cited six emails from 2014 between Deborah French, Arconic's UK sales manager, and executives at the contractors involved in the bidding process for Grenfell Tower's refurbishment contract.
Arconic said in a statement it had known the panels would be used at Grenfell Tower but that it was not its role to decide what was or was not compliant with local building regulations. "The issue is they supplied material that was used above their own marketing material's suggested limit," said Seaport Global Securities analyst Josh Sullivan. "The concern is around the ultimate liability. You have one of the largest fires in UK history and they're searching for somebody to be at fault."
While the extent of Arconic's responsibility was not immediately clear, investors were taking a "sell now and ask questions later" approach, according to Tim Ghriskey, chief investment officer of Solaris Asset Management in New York, New York. The Association of British Insurers said on Sunday it had warned in May that combustible external cladding on high rises could cause fire to spread and that it has been calling on the UK government to review building fire safety regulations since 2009.Cladding panels are often added to the exterior of buildings to insulate them and, particularly in the case of ageing tower blocks, to improve their external appearance. The panels vary in terms of their fire resistance depending on their intended use. (Reporting by Sinead Carew; Editing by Jeffrey Benkoe and Bill Rigby)
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Updated Date: Jun 26, 2017 22:30:05 IST