Bulletin: West Gate Tunnel Dispute Resolution Provides Clarity For CIMIC

MELBOURNE (S&P Global Ratings) Dec. 21, 2021--S&P Global Ratings said today that the settlement by Australia-based construction firm CIMIC Group Ltd. (CIMIC; BBB-/Stable/A-3) of the West Gate Tunnel dispute removes operating and financial uncertainty over CIMIC's exposure to the project. Since being awarded to CIMIC's CPB Contractors business along with John Holland as a joint venture (CPBJH JV) in 2017, the project has endured several contractual disputes. We note that the total contract value of the project to the CPBJH JV has increased to $8.57 billion from the original contract value of $4.99 billion. Accordingly, resolution of the dispute now gives CIMIC clarity regarding its obligations and its level of exposure, given the revised project completion date of late 2025

...December 20, 2021 MELBOURNE (S&P Global Ratings) Dec. 21, 2021--S&P Global Ratings said today that the settlement by Australia-based construction firm CIMIC Group Ltd. (CIMIC; ###-/Stable/A-3) of the West Gate Tunnel dispute removes operating and financial uncertainty over CIMIC's exposure to the project. Since being awarded to CIMIC's CPB Contractors business along with John Holland as a joint venture (CPBJH JV) in 2017, the project has endured several contractual disputes. We note that the total contract value of the project to the CPBJH JV has increased to $8.57 billion from the original contract value of $4.99 billion. Accordingly, resolution of the dispute now gives CIMIC clarity regarding its obligations and its level of exposure, given the revised project completion date of late 2025 from early 2022. Our rating on CIMIC and the stand-alone credit profile of '###-' can withstand the impact of the settlement. This includes the CPBJH JV having revenue reduced by $600 million (CIMIC's...

Bulletin