Final settlement with contractors on National Stadium project
- The general contractor on the National Stadium project and Narodowe Centrum Sportu, the principal, have come to an arrangement which will help remove payment delays and settle past-due accounts with subcontractors.
- The consortium, led by Hydrobudowa Polska, a PBG Group company, also agreed on the consortium’s consideration for project extensions.
- Thus, in the coming days the principal will transfer ca. PLN 100m due to the builders of the National Stadium.
- The parties continue talks to settle all other outstanding issues and claims.
The arrangement of April 6th will open way to prompt settlement of outstanding consideration for the subcontractors hired to build the National Stadium in Warsaw. The causes of payment delays included project extensions and alterations ordered by Narodowe Centrum Sportu following changes in the original project design. The related settlement lag is several months, and some of the additional works have not been paid for to date. In other words, the financing costs have been borne by the general contractor and its subcontractors.
Under the arrangement, the principal will immediately pay over PLN 72m (gross) to the general contractor's escrow account from which payments will be made to the subcontractors. This amount represents 5% of the price of the principal contract for construction of the National Stadium executed in May 2009.
The consortium, composed of Hydrobudowa Polska (leader), PBG and ALPINE Group companies, also agreed with Narodowe Centrum Sportu on the amount of consideration for additional works ordered as part of further project extensions commissioned during execution of the principal contract. The value of such additional consideration agreed and settled under the arrangement is PLN 24.1m net (PLN 29.6m VAT inclusive).
The parties also concluded that in about a week they would agree on consideration for another round of extensions which the general contractor has valued at ca. PLN 23.4m.
As deliveries and construction of food kiosks, football pitch, pitch grass and related installations were covered by the additional contract of December 28th 2011 (necessitated by replacement of the original design of the pitch with a more universal solution), some of the works were excluded from the scope of the principal contract, which in turn resulted in reduction of the original contract price. The exclusions were priced at PLN 14.5m net.
In short, the aggregate consideration due to the general contractor for the work and deliveries performed on the National Stadium project is as follows:
- price of the principal contract (adjusted for the exclusions covered by separate contracts): PLN 1.2353bn net,
- price of the separate contracts for additional works, executed by the end of 2011: PLN 105.4m net,
- price of additional works agreed upon and covered by the arrangement of April 6th 2012: PLN 24.1m net,
- value of additional works pending agreement: ca. PLN 23.4m.
Further, the parties agreed to settle any outstanding additional and substitute works as well as other issues and claims as soon as practicable.