Mega Brands stock sags on $30 mln recall charge
By Susan Taylor
OTTAWA (Reuters) - Shares in Mega Brands MB.TO sank nearly 16 percent on Wednesday to an all-time low after Canada's biggest toy maker said it will take a $30 million fourth-quarter charge, largely for recent toy recalls.
The news comes amid a resurrection effort, as Mega Brands attempts recovery from the massive recall of another magnet toy, integration woes from its 2005 Rose Art acquisition, and supply problems in China.
The Montreal-based company issued two new recalls this week after learning of 44 reports in the United States of magnets coming loose from several toys manufactured in China.
In one case, a 3-year-old boy is receiving medical treatment to remove a magnet from his nose. One 18-month-old boy was found with a magnet in his mouth.
About 1.1 million Magtastik and Magnetix Jr. pre-school toys and 1.3 million MagnaMan action figures are being recalled because they include magnets that can detach and are hazardous if swallowed or inhaled by young children.
If multiple magnets are swallowed they can attract each other and cause intestinal tears or blockages, which can be fatal.
The company said late on Tuesday it expects to take $18 million in charges for the recalls, and additional charges from its expanded Magnetix recall announced in April 2007.
In 2006 Mega Brands first issued a global recall of its Magnetix toys, which killed one child and seriously injured 27 others who swallowed small, powerful magnets. Continued...