Melrose has revealed plans to launch a compensation programme worth up to 100 million US dollars (£73.4 million) following a chemical incident at its GKN Aerospace site in California earlier this year.
The FTSE 100 firm said the claims programme is expected to open in the coming weeks and remain available into 2027 to compensate residents and businesses for damages in relation to the May evacuation order in Garden Grove, such as hotel stays, meals, transport and loss of wages.
Incident and Investigation
Melrose reported an overheating chemical tank at the GKN Aerospace Garden Grove facility at the end of May, which triggered an emergency services response and an evacuation of parts of the surrounding area.
The firm said the Orange County District Attorney’s Office (OCDAO) had closed its criminal investigation and will not bring any criminal charges.
Operations and Financial Impact
Melrose plans to restart full manufacturing operations at the Californian site on September 28.
The group, which owns GKN Aerospace, makes engine parts for jet fighters and military helicopters, as well as civil aircraft, and provides a range of technology for flights.
The company warned last month it expects extra costs of £25 million to £30 million in the second half of 2026 due to the California incident, as well as a hit from operating at reduced capacity.
The group also paused its £175 million share buyback programme while it assessed the financial impact.
While it posted an 18% jump in half-year adjusted earnings and 10% rise in sales last month, it saw the incident reduce interim revenues by £16 million and adjusted operating profits by £9 million.
Company Response
Melrose said: “GKN has co-operated fully with all investigations, including that of the OCDAO, and today’s developments represent a significant step towards full resolution of the OCDAO’s civil investigation.
“Claims by emergency services agencies for costs incurred in responding to the incident and potential civil enforcement penalties will be resolved separately and are not included in the claims programme announced today.
“Since the incident occurred, GKN has worked closely with regulators, local authorities and other relevant stakeholders to carefully review the incident and prepare to safely return to full operations.
“GKN has permanently decommissioned the tank involved in the incident and has made substantial investments in safety enhancements at the facility.”
Its insurance position in relation to the incident remains under review, it added.
