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[NEW YORK] Arconic Inc plans to halt some sales of the panels used on Grenfell Tower following an inferno at the London apartment high-rise this month that killed 79 people.
The manufacturer is under scrutiny after media reports said Arconic was aware that the cladding was a fire hazard before supplying the material known as Reynobond PE. The shares fell the most since the company spun off from Alcoa Inc. eight months ago.
"Arconic is discontinuing global sales of Reynobond PE for use in high-rise applications," the New York-based company said by email Monday. "We believe this is the right decision because of the inconsistency of building codes across the world and issues that have arisen in the wake of the Grenfell Tower tragedy regarding code compliance of cladding systems." The company said it would "continue to fully support" authorities investigating the blaze.
The scrutiny deepens the challenges for Arconic, which was mired in one of corporate America's biggest proxy battles this year. The company, which specialises in metal manufacturing for the aerospace, building and automotive industries, replaced its chief executive officer and agreed to give Elliott Management Corp three board seats after the New York hedge fund took a stake and began agitating for changes.
Arconic supplied the Reynobond material for the Grenfell project in 2015 while acknowledging in its marketing document that the substance can be unsafe for facades on tall buildings, Reuters reported June 24. The company also sells nonflammable versions of Reynobond. Arconic's UK sales manager sent multiple emails as early as 2014 questioning the decision to sell the product for the building, according to the report.
The widespread use of combustible cladding has become a focal point for investigators of the June 14 blaze. As the UK looks to hold someone responsible, Arconic could be subject to significant liabilities, Seaport Global analyst Josh Sullivan said in an interview.
"The political sentiment on the ground in the UK is very aggressive right now," he said. "Whether or not they are ultimately culpable, they are going to be a part of the inquiry process."
The shares fell 6.2 per cent to US$23.97 at 10:52am in New York after dropping as much as 11 per cent, the most intraday since Nov 2.