Saturday, April 17, 2010

Ellaktor says Romanian motorway project cancelled

ATHENS, April 16 (Reuters) - Greece's biggest construction group, Ellaktor, said on Friday its contract to build a 2-billion-euro ($2.80 billion) highway in Romania was cancelled, citing disagreements with the Romanian government.

Under a contract signed in January, the firm would build and operate the Comarnic-Brasov motorway for 30 years in a joint venture with France's Vinci.

"The contract had to be terminated because the contractual terms, which are a common practice in such contracts in Europe, were not accepted by the Romanian state," Ellaktor said in a bourse filing.

"As a result neither the project's funding nor the implementation of the concession agreement was feasible."

At 1223 GMT, Ellaktor's stock was down 2.4 percent, underperforming the broader Greek market, which lost 0.7 percent.

Most analysts said the Romanian project's termination would hurt the firm's turnover in the medium term and heighten risks for backlog replenishment.

Ellaktor sits on a 3 billion euro project backlog and has said it would also team up with Vinci to bid for a major airport project on the island on Crete, the winner of which is expected to be announced by Oct. 19.

Greece's first recession in 13 years and a one-off tax on business narrowed construction profit margins last year. Toll revenues from an Athens ring road, which accounts for a large part of the group's profit are also expected to fall in 2010, for the first time in years, analysts said.

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