Shares of company involved in Eastside project take a dive

Shares in the Multiplex group which is involved in the Gibraltar 'eastside project', took' a dive after it said that it would not make any money in another project they are involved in, the new Wembley Stadium.

Investors were shaken by the news that the group would only break even in the 458 million pounds Wembley project, and would not make the solid profits expected.

Costs Risen

Their chief executive said costs for the Wembley project had risen due to recent reassessment of both finishing trades and a replacement steel contract, said reports in Australia.

Reports in London said that any profits would depend on the outcome of legal cases resulting from a change in steel contractor. Multiplex would have to win legal claims against subcontractors.

The company said it believes their claims are sound and that profits will be possible in future periods.

But former steel contractor Cleveland Bridge has issued a strongly-worded statement saying that "it is extraordinary that a giant, experienced, publicly-listed construction company like Multiplex should find itself, by implication, laying its financial woes at the feet of a subcontractor, of whom it has stated on many occasions to be of no significance or importance to the timely or profitable delivery of Wembley national stadium."

A spokesman for Gordon Sachs is quoted as saying that "such a big writeback on the Wembley project in such a short period has impacted on management credibility."

Wembley should be ready by next January, which almost coincides with the expected execution of the head lease for the Gibraltar 'eastside project'.

Last month the company in which Multiplex has a 51% shareholding, MCB (Gibraltar) Ltd, was chosen for the one-billion pound Eastside project.

The outline planning permission for this huge project is expected to take 14 months, whereupon the company would be expected to make a substantial monetary contribution in excess of 28 million pounds in executing the head lease and other commercial agreements.

The Eastside project will be executed over a 10-year period. If the developer withdraws from the project before outline permission is given the government retains the 4.74 million pounds already paid, said the government at the time the money was paid.

Publicly-quoted companies can see their shares go up and down in stock exchanges.

From Panorama, Gibraltar's Online Daily Newspaper