The provincial legislature approved a bill today enabling the Quebec government to expropriate the assets of U.S. - controlled Asbestos Corp. Ltd. of Montreal.
The company is the largest independent producer of asbestos fiber in the Western World. It is controlled by General Dynamics Corp. of St. Louis.
General Dynamics holds a 54.6 percent interest in the company and has rejected as "totally inadequate" a study commissioned by the Quebec government placing the company's value at $42 a share.
Another study, commissioned by General Dynamics, places the value at about $99.75 a share. G. W. Fiske, General Dynamic's executive vice president, says the company is not for sale. The expropriation legislation has been pending since January.
Discussions between General Dynamics and the government have failed to produce an agreement. The government wants to take the company over because it does not process the asbestos in Quebec.
The largest asbestos producer and processor in the Western World is Canadian Johns-Manville Co. Ltd., owned by Johns-Manville Corp. of Denver. It has an asbestos-processing operation in the province.
Last month, Lee Verstandig, an aide to Sen. John Chaffe of Rhode Island, said the State Department "might provide some assistance in the negotiations, playing a broker role that will buy time and find more compatible means to resolve this problem."
In a recent speech to the Senate, Chaffe urged the State Department to take an active role in negotiations.
Chafee reacted angrily yesterday. "Expropriation is something we'd expect from a South American republic, not from a long-term good friend next door," he said.
Asked what the United States should do, he responded, "We can't send in the Marines. But I expect this extremely unfortunate affair can't help but have a chilling effect on relations between the business community and Quebec. What prudent man would make an investment in mineral resources in Quebec now?"
American businesses control about 70 percent of Canada's foreign investments and are particularly strong in natural resources.
Ray Forbes, public relations official for General Dynamics in St. Louis, said the company would have no comment at present. He explained that Fiske, who also is Asbestos Corp. chairman, is traveling in Korea.
In an interview last January, Fiske said that while there is nothing General Dynamics could do to stop the legislation, its lawyers were exploring legal action to stop actual expropriation.
Fiske said that because Asbestos Corp. is chartered by the federal government of Canada and because its manufacturing plant is located in Germany, he feels it would be unconstitutional for the provincial government of Quebec to expropriate the firm.
M. E. Taschereau, Asbestos president, said "it's not over yet." Further talks will be held after Fiske returns later this month, Taschereau said.
Asbestos Corp. offered to set up two ventures with the Quebec government - a processing operation and a marketing company - but this was rejected by Finance Minister Jacques Parizeau.
"But if we can hang on until the next election, we'll be O.K.," Taschereau said. Earlier, a company spokesman said if Asbestos Corp. is expropriated, "Quebec will be rightly seen as an area hostile to the free enterprise system."
Asbestos shares rose 50 cents to $45.25 on the Toronto Stock Exchange after news of the expropriation bill4s passage was announced.