Deal with Boskalis ends one of M&R’s big claimsComment on this story
Johannesburg - Murray & Roberts (M&R), the listed construction and engineering group, has reached a financial settlement with Boskalis Australia over its major claim related to the Gorgon Pioneer materials offloading facility.
M&R said yesterday that the parties had reached a negotiated settlement on all claims and counterclaims, with the agreement providing for two payments to the group at the end of this month and the end of September.
The Gorgon Pioneer facility was one of three major claims being pursued by M&R and for which it previously made uncertified revenue provisions of more than R2 billion.
The two unresolved claims relate to the Gautrain rapid rail project and the Dubai International Airport project. M&R has never provided a breakdown of the value of its claims for each project.
Ed Jardim, M&R’s group communications executive, said yesterday that it was not able to reveal the size of the Gorgon Pioneer settlement at this stage because of confidentiality agreements but hoped to make the amount known as soon as possible.
Jardim confirmed the total value of the two payments in settlement of the Gorgon Pioneer claims was more than the group’s uncertified revenue taken on the project.
Two separate issues related to the Gautrain project still require resolution: a delay-and-disruption claim resulting from M&R allegedly not being given access to certain construction sites at the agreed date, and a claim related to the variation in the construction methodology for Sandton station.
Jardim said the Sandton station variation claim had been ruled in favour of the Bombela civil joint venture, in which M&R was a 45 percent shareholder. Arbitration to determine the size of the claim was scheduled to take place in M&R’s 2015 financial year.
He said the arbitration process for the Gautrain delay-and-disruption claim was running its course but M&R did not expect a resolution until the 2016 calendar year.
In November, an arbitration award was made in favour of the Gauteng provincial government related to its dispute with the Bombela civil joint venture about the interpretation of the specification for the amount of groundwater contractually allowed to drain into the Gautrain tunnel from Park station to Rosebank station over a specified period of time.
The costs of repairing or paying compensation for these groundwater seepage problems will be split between the joint venture partners.
Jardim said the proposed solution to the seepage problems had not yet been defined and it so was impossible to determine the cost of the solution, if any.
A specialist was appointed earlier this year to look into the issue but M&R expected to update the market only towards the last quarter of this year.
Jardim said the parties to the Dubai International Airport project claim were still trying to establish an alternative settlement mechanism to the legal process of arbitration.
Henry Laas, M&R’s chief executive, said in March that international business was very attractive and a big part of the group’s new strategic future.
In the six months to December last year, 70 percent of M&R’s total revenue of R19bn and 80 percent of its total earnings before interest and tax of R669 million was generated by the group’s international business platforms.
Laas said the group’s three-year recovery and growth plan would come to an end this month and its new strategic future was a work in progress but would be finalised by June next year. But the resolution of the three major claims remained a significant obstacle to implementing a new direction.
M&R shares rose 1 percent to close at R25.25 yesterday.