Tuesday, January 06, 2009

Meydan Statement On Why It Cancelled WCT's Contract

Posted on Dow Jones news.

  • Dubai Meydan: Arabtec, WCT Contract Canceled On Delays

    DUBAI (Zawya Dow Jones)--Dubai-based Meydan L.L.C. said Tuesday it canceled a $1.3 billion contract with Malaysia's WCT Bhd. (9679.KU) and local firm Arabtec Construction L.L.C.
    because the firms failed to stick to the time schedule for the construction of the Nad Al-Sheba Racecourse Project in the emirate.

    "The phases of the completion of the main stand and the infrastructure works for the horse racing course at Nad Al Sheba which had been awarded to Arabtec and WCT of Malaysia has shown considerable delay in implementation," a Meydan official said in an emailed statement to Zawya Dow Jones.

    Meydan said it took the decision to "reassert its resolve to complete the project on time in order to honor its international and local commitments."

    The developer said other contractors will continue working on the mega-project "so as to inaugurate the project on the targeted schedule."

    The WCT-Arabtec joint-venture was awarded the build-only contract by Meydan to construct and complete the main building works, external works and infrastructure works of the racecourse on Sept. 18, 2007. The contractual completion was scheduled for Oct. 7, 2009.

    To date, the joint venture has completed about 55% of the physical portion of the works, with the remaining 40% to be undertaken by nominated subcontractors and the 5% directly by the joint venture.

    WCT shares fell 29.5% to MYR1.29 Tuesday in active trade in reaction to the news before being suspended at the company's request. Arabtec shares closed down 9.7% at AED2.34 on the Dubai Financial Market.

    In a filing to the Kuala Lumpur stock exchange, WCT said it stands to potentially lose 1.35 billion U.A.E. dirhams ($367.5 million) in its order book from the cancellation of the project and that "the terms and conditions of the cancellation is currently being pursued."

    "The Board views the cancellation as a breach of contract (on the part of Meydan)," WCT said, adding the company, through the joint-venture, is currently considering all its options and will take the necessary steps to protect the group's interests.

    Arabtec officials weren't immediately available to comment when called by Zawya Dow Jones.

    The 67 million square feet Meydan development is scheduled to open in 2010 in time for the 15th Dubai World Cup, the richest horse race in the world.