Murray & Roberts, the Bombela Concession Company (BCC) and the Gauteng provincial government have settled all Gautrain development disputes, the construction and engineering group said on Friday.
This caused its share to jump as much as 18% to R12.87 on the day, later settling to a gain of about 7% after the Gauteng government agreed to pay nearly R1.3bn in relation to disputed claims. The Bombela Civil Joint Venture (BCJV), which was responsible for the design and construction of the Gautrain system, had lodged the claims.
“In terms of this conditional settlement, the [Gauteng government] will pay, for the benefit of BCJV, an amount of R980m within five days from the fulfillment date, together with a payment over two years of a capped amount of R294m — inclusive of interest — in full and final settlement of all development period disputes between the parties,” Murray & Roberts said.
The amounts include VAT and it is expected the suspensive conditions will be met by midDecember 2016.
Murray & Roberts said this did not mean the Gauteng government had admitted culpability for outstanding claims. “It’s not a case of culpability by either party, but rather of all parties settling a protracted multiyear process, as there were claims — for and against — by the two parties,” said Ed Jardim, group investor and media executive.
The claims included a water ingress in Gautrain tunnelling between the Rosebank suburban station and Park Station in central Johannesburg.
The Gauteng provincial government would pay the settlement amount to BCJV, which is 45% owned by Murray & Roberts, 45% by French construction group Bouygues and 10% by the Strategic Partners Group, a broad-based black economic empowerment firm.
Roelof Brand, construction markets analyst at Avior Capital Markets, said on Friday that Murray & Roberts had recognised a R300m provision against the water ingress claim.
“This did not include any costs or lost revenue if they would have been ordered to shut down the section [Rosebank to Park Station] of the Gautrain and bring the tunnel into specifications,” he said. “I can’t comment on the quantum of this claim. They [Murray & Roberts] have about R2bn in uncertified revenues on the balance sheet. This claim would have made up a part of this balance.”
Mish-al Emeran, an equity analyst at Electus Fund Managers, said the “ballpark” numbers were a claim against BCC of about R600m for water ingress and a BCC counterclaim against the provincial government of about R1.7bn. About R680m of the latter sum related to the counterclaim involving the Sandton station “cavern”.
This related to the cost of construction of the station, using a method different to that tendered. This had earlier been ruled in favour of BCJV by the Arbitration Foundation of Southern Africa.
There were also claims for design changes to cantilever bridges in the Centurion area of Tshwane, and delay and disruption claims involving 140 individual claims over the alleged late handover of land for construction purposes.
“The balance of about R1bn makes up delay and disruption and cantilever bridges [claims],” Emeran said. “Murray & Roberts haven’t given details [of] individual quantums, but I think delay and disruption makes up a large portion of the balance.
“The news is positive for Murray & Roberts in that cash flow will be received and the uncertainty regarding uncertified revenue is resolved. But on a net basis, BCC spent almost R1bn in legal fees,” he said.
source: Business Day