Largest value project to date for company’s parent
After what must have been a nail-biting eight month wait given the huge sums involved, Australian contractor Leighton Contractors (Asia) has finally secured the contractual green light to build one of the most expensive casino projects in Macau, the casino resort project of Wynn Macau (1128) at Cotai.
In a stock exchange notice released Wednesday, Wynn Macau announced that it had reached agreement with Leighton Contractors to build a luxury integrated hotel resort in the reclamation area of Cotai for a guaranteed maximum price of HK$20 billion (US$2.57 billion).
The project represents the single largest value contract to date for Leighton Contractors’ parent company, Leighton Asia, India and Offshore Group.
“Site preparation and piling works are already well advanced,” the parent company said in a press release.
Completion is expected in the first half of 2016.
Last November, the company announced that it had been selected as the “preferred proponent” for Wynn Macau’s Cotai project.
In late January this year, the company started work on the first component for the project, the piling and site establishment package worth A$222 million (HK$1.8 billion).
According to a stock exchange notice about two weeks ago, the total cost of the foundation works is estimated at HK$1.59 billion by the end of this month.
Leighton will get a little financial assistance from Wynn Macau on start up for the main contract.
“[Leighton Contractors Asia] may apply to the Group for advance payment of up to HK$100 million after two months from the indicated commencement date of the relevant construction works,” the stock exchange notice said.
Failure to achieve the project milestones and reach substantial completion would mean the contractor being subject to liquidated damages not exceeding US$200 million (HK$1.56 billion).
The performance bond is set at 5 percent of the value of the construction works or HK$1 billion assuming the value of the works is the same as the guaranteed maximum price.
For HK$20 billion, Leighton Contractors will build a resort with a construction floor area of more than 450,000 square metres (4.84 million square feet) at Parcel 9, a 51-acre site immediately east of the City of Dreams casino property.
On completion, the resort will feature a casino, luxury hotel and facilities such as spa, restaurants, retail stores, a convention and business center and entertainment venues.
Overall, the Wynn Macau’s total investment in the Cotai project is expected to be about HK$31 billion and within the range of expected costs reported in Wynn’s 2012 annual report.
The latest win is the fourth project that Leighton Contractors has done for Wynn Macau.
In 2007 in a joint venture with China State Construction Engineering, it completed the Wynn Macau casino project worth a total of A$274 million (HK$2.22 billion).
In May this year, its former joint venture partner won its own mega project in Macau, a casino resort project also at Cotai for MGM China Holdings (2282) worth HK$10.5 billion.
Last November, Melco Crown Entertainment (6883) awarded a contract for the Studio City casino project in Cotai to Paul Y.-Yau Lee Joint Venture worth about HK$10 billion.