Canadian Court Orders Nova Chemicals to Pay Dow C$1.43 Billion
A Canadian court has ruled in Dow, Inc.’s favor and awarded the company C$1.43 billion ($1.08 billion). The Court of the Queen’s Bench in Alberta ordered Nova Chemicals to pay Dow that amount for damages that Dow claims were incurred through 2012 related to a jointly-owned ethylene asset in Joffre, Alberta. The judgment is subject to appeal.
Dow shares were trading slightly higher toward the end of the week, after the news. On Wednesday, Dow (NYSE: DOW) shares closed $1.08 higher, or 2.32 percent.
Lauren Jackson, Ph.D., who is an Analytical Manager at Dow, Inc., serves on the City Paper’s Board of Directors.
Dow said in a news release that Nova “failed to operate the ethylene asset at full capacity for more than 10 years, and furthermore, that Nova violated several contractual agreements related to Dow receiving its share of the asset’s ethylene production.”
Nova Chemicals is a Canadian-based company with approximately 2,900 employees worldwide and annual sales of around $4.5 billion.
“These actions resulted in reduced productivity and sales for Dow,” Dow said.
“In accordance with the decision, NOVA Chemicals will make payment on October 11, 2019 utilizing available liquidity on hand,” Nova Chemicals said in a statement sent to the City Paper. “We strongly disagree with the court’s decision and are extremely disappointed with the outcome of this case. Our appeal is pending.”
Dow said that the company expects to record an accounting gain in the third quarter of 2019 because of the judgment, and that they will treat it as a significant non-recurring item when calculating non-GAAP financial measures, including operating earnings per share.
This article has been updated to include a statement from Nova Chemicals.
mike@chemicalcitypaper.com | @Westendorf
Michael Westendorf is the chairman and executive editor of Chemical City Paper. As Executive Editor, he leads the City Paper’s news coverage and editorial team.