A “black cloud” has been lifted from Runge Limited (ASX:RUL) now that the company no longer has a potentially major compensation claim dangling over its head, according to managing director David Meldrum.
The industrial software and consulting company on Thursday marked the passing of the deadline for Standard Bank to further appeal a compensation claim against Pincock Allen & Holt (PAH), one of Runge's two consulting subsidiaries.
The lawsuit related to a US$35 million ($34.5 million) failed loan from Standard Bank to a third party, to fund an aborted mining project.
Standard Bank had alleged that a report into the project prepared by PAH had failed to identify serious problems with the mine.
According to Meldrum, the lawsuit had been “a very big black cloud hanging over the group.[While] no claim had ever been made against Runge [the parent], the market has been hesitant due to the size of the claim against PAH and the fact that it was being pursued in the US.”
Runge has been fighting the lawsuit for its entire life as a public company – the lawsuit was filed in 2007, and Runge's IPO was in 2008.
Meldrum said the company had spent more than $2 million defending the lawsuit and initial appeal, a cost which was “critical for us to protect our global reputation.”
He added that the company is now pursuing options to recover these damages, including possible action against an indemnity insurer that had refused to indemnify PAH when the lawsuit was filed.
RUL shares fell 3.61% on Thursday to $0.400.
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