Multiplex bags loss rumours

LONDON - Multiplex Group, the Australian company rebuilding London's Wembley stadium, has dismissed a report in the Sunday Express that losses from the development may be three times greater than the company said last week.

Cost overruns may exceed 150 million ($388 million), the newspaper said, citing an unidentified independent engineer involved in the project.

Multiplex's "hopelessly optimistic" estimate of 45 million was based on flawed assumptions about how quickly the stadium would be finished, the paper said.

But Multiplex spokesman Mathew Chandler said: "An independent engineer is not what I would call a reliable source, considering our senior management has just undertaken a review of all of our major construction projects.

"We've just announced to the market our expectations for Wembley based on that review, and that is very clear guidance."

Shares in Sydney-based Multiplex fell 6c, or 2.3 per cent, to A$2.59 in Sydney yesterday. They have plunged 52 per cent this year.

"True or not, Multiplex is clearly running into headwinds on the sentiment front," Marcus Padley, a trader at Tolhurst Noall, wrote in a note to clients.

"This sort of story is going to stop the stock dead in its tracks."

Multiplex shares had a record 21 per cent decline on May 31 after the company said its earnings would miss analyst expectations this year and next as a dispute with a contractor resulted in higher steel costs and construction delays, causing a A$109 million loss at England's national soccer stadium.

Multiplex had to take a A$41 million charge on the project.

Chandler yesterday also denied speculation that the company may have lost a A$350 million contract in Parramatta, saying that Multiplex's construction and development units hadn't lost any contracts in the Sydney suburb.

- BLOOMBERG