Costain’s share price drops as it reveals contract problems on £120m Belvedere waste-to-energy project
The main contractor on Costain’s £120m Belvedere energy-to-waste project has become insolvent owing it £22m in revenue it has already booked.
In a contract update to the City, Costain said that the Austrian parent company of Belvedere’s main contractor AE&E Inova, called AE&E Group, has filed for “insolvency proceedings under external administration”. AE&E Inova itself continues to trade.
So far there are no overdue payments and Costain said it expects its next stage payment of £2.6m on 10 December to be made.
However, Costain’s work in progress and milestone payments have not been certified and are worth £22m more than the cash it has received.
It said: “Costain has sought assurances from AE&E Inova that they will make all future payments due under the contract. However, Costain considers that there can be no certainty that such assurances can be obtained.”
Costain said it is in engaged in active discussions with AE&E Inova and Cory Environmental regarding the financing and completion of the project.
Costain’s share price dropped 4.76% this morning to 200p, and analyst Kevin Cammack of Cenkos, predicted it would fall at least 10% during the day.
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