Boral faces $700m US suit from former owner of its windows division

Boral has been sued for $US450m ($687m) in a US court by the former owner of a windows business it acquired.

Boral is facing a counter-claim from Billy Robinson,the former owner of the Krestmark windows business

Boral has been sued for $US450m ($687m) in a US court by the former owner of a windows business it acquired, adding further strain after it disclosed an accounting scandal in the division in December.

Billy Robinson, the majority owner of the Krestmark windows business, launched a counterclaim against Boral after the Australian building materials giant filed a lawsuit alleging the Texas businessman had breached a non-compete clause once the deal had settled.

Krestmark was bought for $US240m in August 2016 and Boral assumed control of the company three months later after landing a $US2.6bn takeover of Headwaters, which had originally purchased the windows company.

Boral had originally opened talks with Headwaters in July — a month before the Krestmark transaction — leading Mr Robinson to believe he sold his business for less than its fair market value price as part of a “conspiracy” between the two companies that ultimately merged.

“At all times during the negotiating period with Robinson and through the terms set forth in the asset purchase agreement, Headwaters Incorporated made one or more material misrepresentations to Robinson that it would be the purchaser and ultimate owner of the Krestmark Entities in exchange for payment to Robinson of $US240m,” a US court filing by Mr Robinson stated.

“In a calculated and deceitful manner, Headwaters Incorporated made this misrepresentation, among others, with the intent that Robinson would rely on it and sell the company he had spent his career building for an amount Headwaters Incorporated knew was not its fair market value, as evidenced by the fact that without Robinson’s knowledge, Headwaters Incorporated had at least an implicit agreement with Boral Industries to sell the Krestmark Entities at a much higher price than it was to pay Robinson.”

The lawsuit represents a further distraction for Boral after a financial scandal stemming from its US windows unit was disclosed in December.

Its long-serving boss Mike Kane is due to depart in August and analysts have flagged the possibility of writedowns at its US business.

Boral declined to comment.

Boral had already launched legal action against Mr Robinson in October 2018, saying he had been involved in setting up a rival windows company in a move contravening a five-year non compete contract, while also adding a fraud claim in September 2019.

Mr Robinson said he was originally promised employment by Headwaters as president of Krestmark for five years once the deal completed.

However, his role was axed by Boral in May 2017 after the two sides fell out amid tensions over the non-compete clause.

The former Krestmark owner said he suffered “injury” as a result of being “wrongfully removed from the windows industry and prohibited from re-entering the windows industry”.

The Texan had previously sent a four-page letter to Boral’s North American boss, David Mariner, rejecting the “unfounded allegations” in its lawsuit.

While conceding he held stakes in glass manufacturing and wrapping businesses, he said neither were in direct or indirect competition with Boral Windows.

Boral revealed on December 5 it had suffered financial irregularities at its US windows business resulting in a one-off hit of up to $US30m. A management reshuffle announced last Friday is set to see Mr Mariner step down from his role at the end of May and leave Boral in June.

Mr Kane is also on his way out in August, after a nine-year stint, although a replacement chief executive has yet to be found.

Boral shares rose 4.9 per cent on Tuesday to $2.58.