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Date Posted: 19:32:42 02/23/03 Sun
Author: a good news story just plain and simple--SMH 21/2/03
Subject:

Finally, ERG secures Sydney contract
21/02/2003
Smart-card vendor ERG was finally awarded the NSW integrated ticketing project worth more than $370 million over the next 10-years.

The deal involves the group to build and operate an integrated smart-card ticketing system across the entire greater Sydney commuter transport network, including private ferry operators and the monorail.

ERG said the NSW ticketing contract value comprised $94 million to supply the system, and $276 million to operate the system over 10 years including CPI increases. It will rank as one of the largest smart-card projects in the world, according to ERG chief executive Peter Fogarty.

"We have been working to build a portfolio of large scale mass transit ticketing projects that will generate annuity like revenue streams," he said.

More than 68 million shares were traded after the news was announced yesterday, with the share price gaining 27 per cent, or 3.5c to finish at 16.5c.

The project, which was awarded to ERG subsidiary Integrated Transit Solutions (ITS), was originally intended for the 2000 Olympics. ERG was awarded preferred tenderer status in July 2001, but the project was further delayed when when a rival consortium, led by Cubic Transport Systems, appealed against the decision. Cubic questioned the probity of of the tender process and sought to block the contract.

The bid was defeated by the State Government in the Supreme Court in July last year, but ERG found other problems to contend with, including a loss of $244 million last financial year as the company announced $165 million in write-offs.

Then in November, after previously admitting that the company's balance sheet was not robust enough to handle major infrastructure projects, Mr Fogarty announced a restructure that would hand control of the group to its convertible noteholders.

ERG said work would start immediately, with smart-card ticketing services becoming available to commuters in phases starting in the second half of this year. The system is expected to be fully operational by 2006.

The Sydney Morning Herald

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