James Hardie Industries NV (JHX) said it was advised that within two years, the available assets of the Asbestos Injuries Compensation Fund (AICF) would probably be insufficient to fund liabilities. The board of AICF has proposed discussion regarding alternative funding arrangements.

James Hardie said that, while it was available to participate in the discussions requested by the AICF, it was not in a position to make contributions to the AICF beyond the obligations set out under the terms of the Amended and Restated Final Funding Agreement (AFFA).

“The company considers that the potential shortfall in the AICF is regrettable,” the company said.

“But contributions to the AICF have been affected by the decline in the company’s cash flow as a result of, among other things, the unprecedented downturn in the US housing markets.”

James Hardie CEO, Louis Gries noted that new housing construction in the US had fallen over 75%, from its peak of more than two million houses in late 2005-early 2006, to just over 500,000 in March 2009.

James Hardie said that one of the options available to the AICF was to pay claimants and their families by instalments, rather than by lump sum.

At 1036 AEST, James Hardie shares were down 24c to $4.23.