Perth-based contractor Decmil has disclosed it will make a provision of between $50 million and $60 million to cover money that is unpaid under its terminated contract with New Zealand’s corrections department, resulting in a loss for the half-year to December 2019.
“Decmil is quantifying the impact of this provision and will release its financial results in early April,” the contractor said today.
“Decmil is confident in its position that it will recover what it is entitled to.”
The company also disclosed it has appointed Vantage Performance and Moelis Australia to assist with managing its debt position.
The $185 million Rapid Deployment of Prisons project involved the construction of three 126-bed modular prisons, with two prisons at Rolleston in the South Island and one at Tongariro in the north.
Decmil chief executive Scott Criddle had previously said the project was difficult, due to its unique nature and it being untested.
In February, Decmil said the Department of Corrections had not paid it for works in the previous four months, alleging the government was not acting consistently with the agreed project process.
Decmil also said attempts to reset the contract in December had broken down, which would adversely affect its cash position.
The company said it would also pursue its entitlements from Maoneng Australia in relation to a solar farm project in NSW.
Decmil had entered into an engineering, procurement and construction contract with Sunraysia Solar Farm, controlled by Maoneng, in late 2018.
The contractor previously stated that while it had completed physical works on the project, the contract could only be satisfied if Sunraysia obtained R1 registration from the Australian Energy Market Operator.
Decmil said it was entitled to an adjustment to the contract completion date and previously escalated this under the dispute mechanism of the contract.
“If current negotiations to resolve the dispute are not successful, the dispute will move into arbitration,” Decmil said today.
The company said all other ongoing projects continued to operate normally and that its debt facilities remain unchanged.
“Beyond the New Zealand issue, Decmil continues to operate as normal, while acknowledging the significant impact of the legal dispute with the Department of Corrections,” Decmil said.
