Mercer Group wants to negotiate a settlement over the 2016 collapse of a silo at Fonterra Cooperative Group’s Edendale factory, but acknowledges it may end up in court. 

The stainless steel fabricator is comfortable, based on advice received, with its insurance cover and liability position. But the complexity of the issues involved means its insurers haven’t agreed to the scope of cover, the company says in presentation slides for chair John Dennehy’s speech to shareholders.

Mercer says all the parties have been working toward a mutually agreeable resolution, and the company is working through the process with its insurers and Fonterra. It would prefer a negotiated outcome, but both mediation and legal proceedings are possible, according to the slides for the annual meeting today. 

When reporting its annual earnings in late August, Mercer said it hoped to reach a conclusion within three months. 

Last year Mercer estimated the cost of the collapse to Fonterra at $20 million. It had supplied the silo, which collapsed in September 2016, to TetraPak. 

Mercer told shareholders today it expects to generate a net profit in the 2019 financial year. It said it’s also in detailed discussions to potentially buy a company that fits its strategy of offering technology-led products and services. 

The shares recently traded at 16 cents, and have dropped 59 percent during the past 12 months.

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