Wynn contractor may owe USD200m for casino delay

Wynn Macau Ltd. has said that the contractor commissioned to build the company’s second casino in Macau could be liable for as much as USD200 million in damages if the Wynn Palace project experiences further delays.
Leighton Contractors (Asia) Ltd., part of Australia’s CIMIC Group Ltd., has been issued with a letter “to reinforce the importance” of meeting the scheduled June opening, Wynn Macau Ltd. said yesterday in a stock exchange statement.
“We are concerned that with your current levels of progress in the execution of the work, you will fail to achieve the third interim milestone,” the Macau casino operator said in a statement signed by billionaire founder Steve Wynn.
Wynn Macau intends to deduct payments from Leighton amounting to USD200,000 for every day construction is delayed “in respect of any failure by you [Leighton] to meet your completion obligations.”
In addition, Leighton could become liable to pay delay damages equating to USD6.2 million, up until the end of this month.
In November, Wynn Resorts announced that the slated opening of the Wynn Palace would be postponed from March until June 25, 2016, after Leighton notified the company that they would be unable to attain the previous construction milestone to schedule.
The latest construction delays will not affect the revised opening date of the Wynn Palace, says a spokesperson for Wynn Resorts Ltd., parent of the Macau unit.
“We are not announcing any delay of Wynn Palace,” said Michael Weaver, spokesman for Wynn Resorts. He declined to comment on the likelihood and potential impact of a delay to the project.
Fiona Tyndall, a spokeswoman for Sydney-based CIMIC, previously called Leighton Holdings who declined to comment.
The Wynn statement additionally said that due to the latest instances of construction delays, Leighton Contractors (Asia) are no longer eligible to receive an early completion bonus of approximately USD38 million.
CIMIC shares fell as much as 1.5 percent to AUS24.17 in Australia, the biggest one-day drop in more than a week. Wynn Macau jumped as much as 4.7 percent to HKD7.88 in Hong Kong to the highest level since January 8, amid a broader rally in casino stocks.
The Wynn Palace, one of a number of new casino resorts due to open in Macau this year, is to feature 1,700 hotel rooms, a lake with gondolas and fountains, a meeting space and a casino. It is the first of the company’s venues in the developing gambling Cotai area.
The new resorts are highly anticipated as more mass-
market attractions, and a transformation of the Cotai Strip “from the construction zone it’s been for two years” should help Macau “regain its allure and buzz” among China’s growing consumer class, according to Bloomberg Intelligence in a note last week. MDT/Bloomberg