Cen­power hits Group Five with a new claim

Shares dip by more than 26% on news of­fur­therde­mand of $60.5m over the Kpone power plant con­tract in Ghana

Cape Times - - BUSINESS REPORT - ROY COKAYNE [email protected]

SHARES in Group Five slumped by a fur­ther 26.47 per­cent on the JSE yes­ter­day after the listed con­struc­tion and en­gi­neer­ing group re­ported that Cen­power, the client for the $410 mil­lion (R5.66 bil­lion) Kpone power plant in Ghana, had is­sued a new claim for a fur­ther $60.5m.

Cen­power has al­ready been paid $62.7m in de­lay dam­ages by Group Five’s bank guar­an­tee providers re­lated to the Kpone con­tract.

Group Five pre­vi­ously dis­closed it had a per­for­mance bond of $62.3m, a re­ten­tion bond of $41.5m and an ad­vance pay­ment bond of $2.6m in place on Kpone.

It said that the cur­rent re­main­ing value of on-de­mand bonds in is­sue from fi­nan­cial in­sti­tu­tions to the client amounted to $43.8m, for which Cen­power had de­manded pay­ment ear­lier yes­ter­day.

Group Five’s share price closed yes­ter­day at 25 cents.

The group’s share price nose­dived by 30 per­cent on Novem­ber 16 to close at 70c from the pre­vi­ous day’s 100c clos­ing price after the High Court in Jo­han­nes­burg dis­missed its ur­gent in­ter­dict ap­pli­ca­tion to stop Cen­power from de­mand­ing the $62.7m in de­lay dam­ages from its bank guar­an­tee providers on the project.

Group Five said yes­ter­day that the new claim fol­lowed Cen­power’s “pur­ported no­tice of ter­mi­na­tion” of the Kpone con­tract and was Cen­power’s eval­u­a­tion of the cost to be in­curred to com­plete the works on the con­tract and re­coup es­ti­mated losses and dam­ages that Cen­power be­lieved it had in­curred.

The group con­firmed its bank guar­an­tee providers had re­ceived a writ­ten de­mand re­quest­ing that $43.8m of the $60.5m be paid to Cen­power.

Group Five said it was in dis­cus­sions with its le­gal ad­vis­ers, se­nior coun­sel and bank guar­an­tee providers, about the claim and de­mand and was “con­sid­er­ing the avail­able le­gal ac­tion”.

It stressed that, in terms of the con­tract, any amount that the group would be held li­able for ei­ther had to be agreed be­tween the par­ties or de­ter­mined through a dis­pute res­o­lu­tion mech­a­nism in the con­tract prior to the pay­ment of any such amounts.

Group Five said this de­mand had not been de­ter­mined in­de­pen­dently and it also did not re­flect the counter-claims that the group was “legally en­ti­tled to and is pur­su­ing”.

The group said it strongly dis­puted the new amount be­ing claimed by Cen­power and the de­mand for its pay­ment, stress­ing that Cen­power had it­self con­firmed that the con­struc­tion of the plant was com­plete, with only test­ing and com­mis­sion­ing to be per­formed.

“As (pre­vi­ously) com­mu­ni­cated, the pro­vi­sion of the fuel was the client’s (Cen­power’s) re­spon­si­bil­ity and the group was un­able to com­plete the test­ing and com­mis­sion­ing of the plant as the fuel pro­vided by the client was con­tam­i­nated and (was there­fore) un­fit for its pur­pose.

“The con­tam­i­na­tion of the fuel re­mained un­re­solved at the date of ter­mi­na­tion,” it said.

Cen­power claimed ear­lier this week that the $62.7m in de­lay dam­ages it re­ceived from Group Five’s bank guar­an­tee providers did “not come close” to the losses it had suf­fered.

Group Five de­nied last week that Cen­power was en­ti­tled to ter­mi­nate the con­tract and be­lieved that it con­sti­tuted a re­pu­di­a­tion of the con­tract and had there­fore no­ti­fied Cen­power that it had ac­cepted its re­pu­di­a­tion of the con­tract and is­sued a no­tice of ter­mi­na­tion with im­me­di­ate ef­fect to Cen­power.

It said the ter­mi­na­tion of the con­tract would, among other things, en­able the group to pro­ceed to dis­pute the res­o­lu­tion, in ac­cor­dance with the con­tract, for the pay­ment of all amounts due and ow­ing to the group un­der the con­tract.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.