Flames when the fire first broke out on October 22, 2019. Photo / Daniel Walker
Flames when the fire first broke out on October 22, 2019. Photo / Daniel Walker
A Fletcher Building subsidiary is taking legal proceedings over insurance for works at the $750 million New Zealand International Convention Centre.
A Fletcher Construction spokesperson confirmed this morning that legal action had been filed but declined to comment further.
"Proceedings have been initiated in relation to a difference of interpretationover an insurance policy, as it applies to the New Zealand International Convention Centre project. It is not appropriate for any parties to make further comment," the spokesperson said in a statement.
New Zealand's biggest builder, Fletcher Construction, is the head contractor on repairs to the centre after the October 2019 fire.
NZICC owner SkyCity Entertainment Group said in September 2020 "reinstatement costs currently estimated to be at least $336m".
Michael Ahearne, SkyCity chief executive, told the Herald on Tuesday that he had been on a tour inside the NZICC with Fletcher Building chief executive Ross Taylor in the past week.
Ahearne expressed satisfaction with progress on the job where he said around 600 people were working.
He also said that in 2019, when he was SkyCity's chief operating officer, he headed the company's response to the fire.
Repairs are now underway to the NZICC. Photo / supplied
All publicity at the time was fronted by then-CEO Graeme Stephens who left suddenly and without explanation, to be replaced by Ahearne.
Big insurance groups back the project.
The Herald reported in 2020 that more than 80 per cent of the cover was held by American insurance giant Chubb, with the rest held by Australia's second-largest insurer, QBE, and Warren Buffett's Berkshire Hathaway.
Chubb operates in 54 countries and had more than US$174 billion ($273.3b) in assets and collects around US$38b in gross premiums.
Australia's QBE Insurance Group operates in Australia, North America, Europe and the Asia Pacific region.
Berkshire Hathaway is the world's largest financial services company by revenue and Buffett, its chief executive, is one of the richest people in the world.
Chubb is listed on the New York Stock Exchange and claims to be the world's largest publicly traded property and casualty insurance company and the largest commercial insurer in the United States.
Fletcher is an insured party under both its contract works insurance policy and third party liability insurance policy.
SkyCity said in November 2019 that its insurers had confirmed coverage for damage caused by fire to the NZICC and the adjacent Horizon Hotel.
Fletcher Building said then it was "working closely with the insurer for the contract works and third party liability insurances which are in place on the project. Fletcher Building notes and agrees with the comments by SkyCity confirming the credibility of the insurer and their ability to meet their obligations".
The Herald reported last year that around 650 people who were working on the job were offsite under alert level 4.
John Salier, project director for the CBD job for Fletcher Construction, said last year the lockdown barred all but essential building work.
Fixing the NZICC after the fire was not deemed essential, Salier said. Workers could not be on the site for the 107-day lockdown.
Fletcher's first move had been to ensure the site was safe, he said.
SkyCity's half-year report on February 14 updated shareholders on the NZICC. It didn't sound good news. The job was much harder and taking longer, the company indicated then.
"Project remains complex. Reinstatement works progressing but slower than expected. Latest Fletcher Construction programme indicates completion of Horizon Hotel during 2024 and NZICC during 2025. Remain comfortable with contractual position on project. No material change to previous guidance for total SkyCity projects costs around $750m," the update said.
SkyCity has a contract with the Government on the date it must have the NZICC finished.
Last year, the Government and SkyCity agreed to extend the long-stop date for completion from January 2, 2025 to December 15, 2027 under the New Zealand International Convention Centre Project and Licensing Agreement.
That seemed like even worse news at the time.
Fletcher's February investor presentation of its half-year result only mentioned the NZICC in passing.
Under the financial summary of its construction division, it said: "Revenue up 11 per for half-year. Increased building works at NZICC (nil margin) and Winstone Wallboards factory."
That passing reference was an oblique indication that Fletcher wasn't making any profit margin on its NZICC reinstatement work. However, the business hasn't said anything further on that since February.
