Report: Navistar Shares Up on EPA ‘Final Rule’
Shares of embattled U.S. truck and engine maker Navistar International Corp. rose as much as 10% on Monday (Aug. 6) after U.S. regulators submitted a final rule on whether to allow the company to continue to pay fines to allow it to sell engines that do not meet U.S. emissions standards.
Reuters reported that the U.S. Environmental Protection Agency (EPA) on Saturday filed its final ruling on a legal mechanism that allows the company to continue to sell heavy-duty diesel engines that do not meet current U.S. emissions standards by paying fines. In a filing on a U.S. General Services Administration website, the EPA declared that it had filed its rule for review but did not disclose details of the final ruling.
“Navistar is encouraged by the submittal of the final rule to (the Office of Management and Budget) and we hope that it generally mirrors what was in the interim rule,” said Navistar spokeswoman Karen Denning.
The interim rule had allowed the company to pay “non-conformance penalties” when it sold engines that did not meet regulatory standards, a move that hurt its profit margins but kept its sales up.
According to Reuters, Navistar shares rose $1.92 to $24.31 on the New York Stock Exchange, after earlier climbing as high as $24.77.
Robert Wertheimer, an analyst at Vertical Research Partners who covers the company, said investors had been concerned about the ruling.
“That’s one of the big risks overhanging the stock,” Wertheimer said, adding that until the EPA discloses what the final ruling is “I can’t see that it’s a positive or a negative.”
An EPA spokeswoman did not immediately respond to a request for comment.
The Lisle, Illinois-based company last week told some 3,400 salaried workers that it would consider layoffs as a way of lowering its expenses, Denning also said.
Navistar shares have lost about 41% of their value this year as the company has failed to win EPA approval for a new generation of diesel engines before this month changing course and saying it would work with Cummins Inc. to adopt a more mainstream technology.