more trouble for multiplex at wembley, page-2

market seems to like the latest ann. Multiplex tries $232m redevelopment in London
Email Print Normal font Large font By Carolyn Cummins Commercial Property Editor
December 5, 2005


Mr Roberts … confident.
Photo: Paul Miller

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AdvertisementMULTIPLEX is extending its reach in the United Kingdom following the submission of plans to develop a £100 million ($232 million) apartment and retail complex at the Elephant and Castle site in the London borough of Southwark.

Under the scheme Multiplex will construct a 42-storey tower which it says will be the trigger for the regeneration of an area that has been in need of repair for many years.

Multiplex has established a new joint venture vehicle, Castle House Development, to build the project in conjunction with architects Hamilton & Associates.

The property will replace an existing six storey, 40-year old office block.

The application for the development comes as Multiplex's directors push the sub-contractors at its $1.8 billion Wembley stadium hard in a bid to get the ground ready for the FA Cup final in May next year.

But there remains many hurdles before the referee blows the opening whistle, not the least being London's weather, where snow has been falling for the past week.

Adding to the group's woes were reports from the UK that a sub-contractor on the site, piping company SGD Engineering, called in administrators this week after a contractual dispute with Multiplex left it £2 millionout of pocket and its work incomplete.

The report says Multiplex's changes to piping requirements - there are 2618 toilets alone - caused SGD to reportedly experience cost overruns of more than 40 per cent, indicative of the problems that have plagued the Wembley redevelopment.

Despite Multiplex directors' apparent confidence that the site will be ready in time, Cardiff's new Millenium Stadium is on standby to again hold the event should Wembley not be ready.

At the group's annual general meeting last month, Multiplex's chief executive Andrew Roberts warned there would be further cost overruns at Wembley, as the budget, particularly steel related, increases to enable the revised March 2006 deadline to be met.

In a note to clients in November, UBS analysts said management was seeking to contain these additional losses to a maximum of £25 million earnings before interest and tax. However, this pushes the corporate side of the business into a $22 million loss.

A year ago Multiplex securities were heading to a high of $6 and, on December 22, last year the group raised $200 million through a placement at $5.54 a security.

But in February this year Mr Roberts revealed the full extent of the problems at Wembley and the fact the group had written the value of the project back to book value.

Investors stampeded out of the stock with the price falling to a low of $2.27. On Friday, the securities closed at $3.33.