Australia lends James Hardie A$320 million for asbestos victims

SYDNEY (Reuters) - Australia will lend up to A$320 million ($294 million) to building products company James Hardie Industries NV to ensure it can meet payments to asbestos victims under a 2005 deal, the government said on Saturday.

In April, James Hardie informed the Australian Stock Exchange that it would not be able to make any contribution this year to a fund set up under the deal, leaving in doubt compensation payments to many seriously ill people.

The government said in a statement that without the loan facility the fund would likely have been exhausted within two years.

"This loan facility will cover some three years of compensation payments at current claim rates," it said.

Asbestos was for decades widely used in Australian homes, schools and other buildings, although is now subject to strict controls.

James Hardie was once one of Australia's top asbestos products firms, but many Australians exposed to those products have developed fatal asbestos-related illnesses and eventually sought to hold the company responsible.

The loan will be handled by the New South Wales state government, with half the money coming from the state's own coffers and half from the federal government, said the statement, issued jointly by the two governments.

James Hardie still had an obligation in principle to pay into the fund, the statement said.

"The advice to both governments was that, if action wasn't taken now, some asbestos victims faced the very real prospect of not surviving long enough to receive their full compensation payments," the statement said.

"This decision will help give peace of mind to asbestos victims and their families," it said.