Show your support by donating any amount. (Note: We are still technically a for-profit company, so your
contribution is not tax-deductible.)
PayPal Acct: 
Feedback: 
Donate to VoyForums (PayPal):
| Sunday, May 17, 04:13:36pm | [ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 1, 2, [3], 4, 5, 6, 7, 8, 9, 10 ] |
| Subject: ERG finds source of guarantee funds for overseas contractsApril 4 2003 Melbourne Age | |
|
Author: (the WA article should read 17/4--(American date)(Rome expansion gets green light)Many tenderers were now demanding such large bonds that the risk had become unacceptable. |
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: Thursday, April 17, 10:16:25pm In reply to: Newspapers reporting result--March 7 2003 SMH 's message, "Noteholders have tickets to ride" on Thursday, March 06, 08:38:56am http://www.theage.com.au/articles/2003/04/03/1048962879392.html ERG finds source of guarantee funds for overseas contracts April 4 2003 By Ian Porter The financially strapped ERG has found a source of bond guarantees for overseas contracts at a time when the world "bonding" market is all but closed. The fare collection and smartcard technology group will be able to pursue its two latest contracts, thanks to support from the Export Finance and Insurance Corporation. The corporation will underwrite the $25.6 million of bonds ERG needs to put up as a performance guarantee for contracts in Stockholm and Seattle. The contracts will bring in more than $200 million of revenue over time. The deal obviates tying up scarce working capital, limiting its ability to fund other projects. The EFIC deal is conditional on shareholders approving the capital reconstruction, which will be considered at a meeting on April 30. Note holders have given their approval. advertisement advertisement Bonding has become a big problem in the past two years due to the heavy losses being borne by the insurance industry and the withdrawal of many providers of bond finance from the world market. Winners of big equipment supply contracts are required to put up substantial amounts of money as a bond or guarantee in case they fail to fulfil a contract. This has stretched ERG's balance sheet in the past and led to the formation of alliances with larger companies, such as Northrop Grumman, which is partnering ERG on its Washington contract. ERG did not involve partners in the Stockholm and Seattle projects. ERG managing director Peter Fogarty said the difficulty in getting bond guarantees delayed the signing of some contracts in the December half-year. "The altered bonding market has had a big influence on our performance. It continues to be a concern in ongoing contracts," he said when releasing the interim results recently. Many tenderers were now demanding such large bonds that the risk had become unacceptable. "We recently made a decision not to bid for the Montreal contract," he said. "We believe we were absolute front-runners to win it. They wanted us to have a relatively low profit margin and put up $C35 million ($A39.2 million) in bonds." ERG's share price eased 0.5¢ to 10¢ yesterday. The reporter holds ERG shares. Printer friendly version Email to [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| 'Smart-card' ticket system approved for transit riders Seattle | Tuesday, April 08, 2003 - Page updated at 12:00 a.m.Seattle Times | Thursday, April 17, 10:21:30pm |