ENGINEERING firm Redhall Group has accepted a lower than expected settlement offer of £2.1m from Vivergo Fuels, but analysts welcomed the deal saying it will close the matter.
Wakefield-based Redhall said the £2.1m full and final settlement of all claims, which is to be paid in cash within five days, falls considerably short of the amount the board believed was recoverable.
However, the group said that further legal proceedings would have been a long and drawn out process and the outcome and legal costs would have been uncertain, so it decided it was prudent to accept the offer.
There will be an exceptional charge of £7.7m before tax and legal and professional costs incurred in reaching this settlement.
Redhall’s CEO Richard Shuttleworth said: “We are pleased that in reaching this settlement we can draw a line under the matter. Whilst the settlement is not at the value we had anticipated, with our new banking facilities we can now focus our resources on growing the business which has made a positive start to 2014.”
The case dates back to Vivergo’s decision to terminate Redhall’s work at a new biofuels plant at Saltend in 2011.
Analyst Andy Smith, at Charles Stanley, said: “We can now draw a line under this issue and it will remove a material distraction for management and uncertainty for investors.”
Analyst David Buxton, at FinnCap, added: “We believe the market largely discounted a negative outcome on this case, so while some share price weakness was to be expected, the impact on the valuation should not be cataclysmic. If anything, it clears the decks.”