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Sisk partners €50m action over Polish motorway dispute

A joint venture between Ireland's biggest construction firm, Sisk, and Limerick-based Roadbridge is preparing to launch a €50m-plus legal action against the Polish national roads authority.

Last week, the venture, called SRB, completed one of three motorway contracts it was awarded in 2010. However, it has also just terminated its involvement in the other two schemes. One of those motorways is understood to be 70pc completed and the other nearly half finished.

The joint venture will seek the damages against the roads authority, called GDDKiA, following major financial disagreements.

SRB is also seeking an additional €90m in payments from the roads authority in relation to the roughly 30km stretch of motorway it completed last week. That figure represents price variations that arose during the course of the contract. SRB will pursue that money through a normal contract-related process.

The chief executive of the Sisk Group, Liam Nagle, confirmed the planned legal action yesterday.

Speaking to the Irish Independent, he also said that the company's construction unit -- Sicon -- was also going to report a loss of between €50m-€60m in respect of its 2011 financial year after factoring in the losses it has made in Poland. Without those losses, Sicon would have broken even.

The Sisk group also consists of Sisk Healthcare, which has been unaffected by the activities in Poland.

Well capitalised

Mr Nagle insisted that Sicon remained well capitalised, with just €3m in debt, €70m in gross cash and €100m of shareholder funds. He said the company had a strong pipeline of business, particularly in the UK, but also in other countries.

It's about to hand over a major extension to Dublin's Mater Hospital and is also working on the Shard -- London's futuristic skyscraper.

"The client hasn't administered contracts properly," he claimed in relation to the Polish motorway schemes. SRB said it endeavoured to advance a number of proposals with the roads authority to complete the motorways, but agreement couldn't be reached.

The three motorway tenders SRB secured were worth a total of €525m and included 94km in roads, 88 bridges and four toll plazas. The schemes were designed by the roads authority.

A number of issues are understood to have arisen on the three motorway schemes SRB was involved in.

Project start dates were delayed, while flooding and significant archaeology finds also impacted costs. SRB's Polish partner on the two unfinished motorways, publicly-listed PBG, got into severe financial difficulties and entered a process similar to administration.

PBG -- one of Poland's biggest construction firms -- recently posted a €414m first-half loss and is under intense financial pressure. A number of other Polish building firms have also gone bust or got into severe difficulties amid a massive €18bn infrastructure spending plan by the government aimed at improving the country's roads and rail network.

Irish Independent