Shares of Melrose Industries advanced 8% on Tuesday after the company outlined a September 28 target to resume full operations at its GKN Aerospace facility in Garden Grove, California.
The plant, which operates under GKN Aerospace, has been operating at roughly 50% capacity since a late-May incident involving an overheating chemical tank forced the evacuation of 50,000 nearby residents for several days. Melrose reported in its July half-year results that the reduced capacity had trimmed monthly sales, profit and cash flow by about £6 million.
In response to the incident, Melrose said it will allocate up to $100 million to settle damage claims from affected local residents. The company has also received confirmation that California’s district attorney will close the criminal investigation into the incident without filing charges, according to a statement late Monday.
RBC Capital analyst Mark Fielding noted in a research note that while the settlement cost is material, it remains within manageable parameters. Fielding added that the reopening timeline provides clarity amid lingering uncertainty over potential additional expenses.
