Dominic Browne 19 February 2019

Amey facing £200m Birmingham divorce bill

Amey facing £200m Birmingham divorce bill image

Amey could be set to pay more than £200m to extricate itself from its troubled 25-year PFI contract with Birmingham after years of legal difficulties, according to reports.

The Sunday Times has reported that Amey's parent company, Spanish infrastructure giant Ferrovial, hopes to terminate the deal to expedite its planned sale of Amey.

PAI Partners and Greybull Capital are understood to be waiting in the wings to potentially acquire the contractor, which, despite going through a difficult period, is winning work again on England's strategic road network.

The news comes after Amey lost a five-year legal in the Appeal Court with Birmingham over the £2.7bn deal. Lord Justice Jackson said Amey had applied an 'ingenious new interpretation of the contract' to avoid certain repairs.

It is understood Amey is in talks to get out of the contract but negotiations could be difficult. Reports suggest the local authority may be holding out for a settlement of £300m or more.

The council told Transport Network that £55m plus interest owed by Amey remains unpaid, which will also factor into the talks.

Amey already wrote off £208.5m on the deal last year and it seems Ferrovial, which also co-owns Heathrow, may be looking to cut it losses.

A council spokesman said: 'We continue to work with all stakeholders to achieve a consensual replacement of Amey as soon as practicable and with regard to ensuring continuity of service.'

An Amey spokesman said: 'The Birmingham contract is just one of hundreds of contracts across the UK which Amey operates successfully. It is no secret that the ongoing dispute in relation to the Birmingham Highways PFI deal remains a challenge.

'That is why we are working closely with Birmingham City Council, Cabinet Office and a range of other stakeholders to reach a resolution which is in the best interests of all sides, and importantly delivers for the people of Birmingham. We will continue to meet our obligations under the contract for the remainder of its term to 2035, or until such time an alternative position is agreed.

'Amey is a well-managed company, and has a strong cash position with positive cash flows. We disclosed zero external debt in our last audited accounts, a conservatively managed pension fund and a forward order book of over £11bn which we look forward to delivering.'

PFIs have a had a mixed history in local highways, with Birmingham and the Isle of Wight arrangements raising some disputes, however the PFI in Hounslow is understood to be operating very well.

This story first appeared on Transport Network

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