Kingspan’s 'invitation' to meet Levelling Up Secretary Michael Gove will shift the high-rise fire safety spotlight to materials suppliers, according to UBS.
Michael Gove’s letter references an article in the Observer where Kingspan is said to have declared it should pay where products have been inappropriately used, notes UBS.
As well as the invitation from the DLHUC for talks, the letter states that “those companies who do not share our commitment to righting the wrongs of the past must expect to face commercial consequences.'
UBS said it understands that Kingspan is prepared to stand behind its K15 insulation board saying it was inappropriately specified at Grenfell Tower.
Cumulative K15 sales in the UK were around £100mln between 2005-2015, UBS adds.
The bank says it does not know if other companies that supplied products to Grenfell Tower (such as St Gobain and Arconic) had also received letters from the DLHUC.
“There was previously a process with the Construction Products Association (CPA) which appears not to have progressed.
“We would be surprised if the U.K. government ended up singling out individual businesses to pay.
“The precedent in the housing sector is that all companies were treated equally (on both the Residential Developer Property Tax as well as building remediation obligations) and we would expect the same to hold true for material suppliers.”
UBS has a 'buy' recommendation on Kinspan with an €85 share target, which includes a €100mln contingency for UK fire safety issues and said in its opinion the situation has not fundamentally changed with the letter.