Fire bill up to $250m, says analyst
Fire damage at the NZ International Convention Centre could cost up to $250 million to fix — which could provide some upside to Fletcher Building, a finance expert says.
Grant Swanepoel, head of equity research and institutional equities at Craigs Investment Partners, said yesterday the minimum cost to fix might be $150m although he stressed these were his estimates only.
The company refused to confirm if the figures matched its own assessment.
A Fletcher spokesperson said yesterday: “It will be some time before any kind of informed estimation can be given due to the complex safety considerations as the building is assessed.”
But Swanepoel said the repair could benefit the builder and almost be in the form of an entirely new quarter-billiondollar contract if it did come to that cost.
“We estimate that the remedial work will be about $150m to $250m and should be viewed as a new construction project for Fletcher on a cost-plus basis,” Swanepoel said yesterday.
Instead of the fire hurting Fletcher financially, a possible insurance payout to SkyCity could result in so much extra work that it would boost the builder, he indicated.
But it would mean that the troublesome job in Fletcher’s Building + Interiors division dragged out much longer, possibly into late 2021.
Fletcher and SkyCity have released post-fire updates to the NZX citing insurance cover, the investigation and thanking fire and emergency services.
The centre was built up to the top floor, or level seven, but reports said it was damaged down to level five. Water damage extended into the basement where vehicles were partly submerged.
Fletcher took control of the site again after a full investigation.
However, Swanepoel said parts of that investigation were still ongoing.
He forecast the next move would be for an instruction to be given by SkyCity’s insurer to begin repairs.
Both SkyCity chief executive Graeme Stephens and Fletcher chief executive Ross Taylor have said their businesses are committed to finishing the project.
Fletcher shares have rallied lately on the NZX: when the fire broke out on October 22, shares were trading at just $4.65 but yesterday they closed well up at $5.17.