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Bombela Concession Company & the Gauteng Provincial Government to settle all Gautrain Development Period Disputes
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN: ZAE000073441
(“Murray & Roberts”)
THE BOMBELA CONCESSION COMPANY AND THE GAUTENG PROVINCIAL
GOVERNMENT TO SETTLE ALL GAUTRAIN DEVELOPMENT PERIOD DISPUTES
Shareholders are referred to the previous statements released on the Stock Exchange News
Service of the JSE Limited (“SENS”), regarding the Gautrain arbitration proceedings
between the Bombela Concession Company (“BCC”) and the Gauteng Provincial
Government (“GPG”). Murray & Roberts is a 33% shareholder in BCC.
The BCC and the GPG, represented by the Gautrain Management Agency (“GMA”),
(collectively referred to as “the Parties”), have agreed to a comprehensive settlement of all
disputes relating to the Gautrain Rapid Rail Link (“Gautrain”) project’s development period,
bringing an end to multi-year protracted legal processes.
Due to the extended time, significant costs and uncertain outcomes involved in these legal
processes, the Parties agreed to explore an amicable settlement of all development period
disputes and will be subject to certain conditions precedent.
The settlement includes the following disputes:
1. Sandton Station ‘cavern’;
2. John Vorster and Jean Avenues cantilever bridges in Centurion;
3. Delay and Disruption; and
4. Water Ingress in the tunnel section between Park Station and Emergency shaft E2.
Project background
The Gautrain is one of the largest Public-Private-Partnership Projects launched in South
Africa and was envisioned to become the central hub of a future integrated public transport
system in Gauteng.
The Concession Agreement signed between the GPG and BCC includes a 15-year
operating and maintenance period after construction, which period will come to an end in
March 2026.
The BCC, as the concessionaire, has contracted various subcontractors to develop and
operate the Gautrain system. One such subcontractor is the Bombela Civil Joint Venture
(Pty) Ltd (“BCJV”), which was responsible for the design and construction of the entire
Gautrain system. Murray & Roberts (45%), Bouygues (45%) and Strategic Partners Group
(10%) are the shareholders of BCJV. The development period claims against GPG, are all
construction-related and were lodged by BCJV.
Claims background
* Sandton Station ‘cavern’ claim – This claim by BCJV, relating to the cost of
construction of the station utilising a construction methodology different to the
tendered methodology, was ruled in favour of BCJV by the Arbitration Foundation of
Southern Africa (“AFSA”).
* The John Vorster and Jean Avenues cantilever bridges claim – This claim by BCJV is
for additional costs incurred following a design change to the bridges over John
Vorster and Jean Avenues in Centurion. This claim, on its merits, was ruled in favour
of BCJV and the quantum hearing was heard during October 2016.
* Delay & Disruption claim – This is a complex claim and entails over 140 individual
claims. The Delay and Disruption claim by BCJV relates to the late handover of land
for construction purposes. Due to the complexity of this claim, the initial arbitration
hearings were focused on addressing the legal interpretation of various clauses in
the Gautrain Concession Agreement. The Delay & Disruption claim, merit and
quantum was scheduled to be heard in calendar years 2017 and 2018.
* The Water Ingress claim – The Gautrain tunnel, as a drained tunnel, had to be built
to meet the concessionaire’s water inflow specifications. On completion, the water
ingress was found to be in excess of the contract specification, which led to a dispute
between the Parties. In November 2013 the arbitration panel of AFSA ruled in favour
of GPG.
Commercial settlement
The Parties have agreed to settle all development period disputes on a comprehensive
basis. In terms of this conditional settlement the GPG will pay, for the benefit of BCJV, an
amount of R980 million within five (5) days from the fulfilment date, together with a payment
over two years of a capped amount of R294 million (inclusive of interest) in full and final
settlement of all development period disputes between the Parties. The amounts mentioned
above include VAT. It is expected that the suspensive conditions will be met by mid-
December 2016 and stakeholders will be updated as soon as they have been met.
The Parties have agreed that no further work is required by BCJV to address water ingress
into the tunnel. Although the water ingress is not in line with the contract specification, the
functionality and safe operation of the system is not threatened by the inflow of water into the
tunnel and the system continues to be safe for use.
Conclusion
Murray & Roberts, as a shareholder in both BCC and BCJV, believes that the settlement is
in the best interests of all stakeholders.
Bedfordview
18 November 2016
Sponsor: Deutsche Securities (SA) Proprietary Limited
Date: 18/11/2016 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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