U.K. Rail Contractor Metronet Calls in Administrator
Metronet, the company upgrading two thirds of London's underground rail network, has asked for an administrator to be appointed after overspending led to a cash shortage, its owners said on Wednesday.
"This news, while not unexpected, is clearly disappointing," said WS Atkins a partner in Metronet alongside Balfour Beatty, Bombardier, EDF Energy and Macquarie Bank-owned Thames Water.
Metronet's owners made the decision after learning on Monday it would receive less than a third of the 551 million pounds ($1.12 billion) it had requested from London Underground to cover rising costs.
Independent arbiter Chris Bolt said he awarded Metronet only 121 million pounds because the consortium had not been working efficiently and economically.
The administration will not lead to a liquidation or a sale of assets, but will include a debt restructuring, refinancing and renegotiation of contracts, said a spokeswoman.
Metronet's 30-year contract includes 17 billion pounds of investment.
The contractor was cut off from its funds earlier this year by its lenders after it emerged its initial 8 billion pound investment plan was expected to incur another 750 million pounds of costs.