VANCOUVER, BRITISH COLUMBIA – (April 27, 2011) Clearlease Reports Steel construction producer Canam Group is negotiating with a French cable company to help recover some of the higher costs it needs to pay to complete the installation of cables on the roof of Winter Olympic Games venue BC Place.
The Quebec-based company last week announced that it was booking a $25 million after-tax reserve that is expected to fully cover the additional costs. In late 2009, Canam’s Structal division won a $100-million contract to build the world’s largest cable-supported retractable roof to replace the stadium’s air-supported dome.
Canam (TSX:CAM) consulted with cable experts Freyssinet about the project and claims the French firm dramatically underestimated the time and costs required to install the roof.
Chief operating officer Marc Dutil declined to say how much it was seeking from Freyssinet, a partner on past and likely future projects.
“This is not take a shotgun and shoot them in the gut type of negotiations,” he said in an interview on Wednesday.
“We hope that this is something that can be dealt with diligently, between reasonable people.”
Dutil said Canam first approached Freyssinet about six weeks ago about this issue and hopes to reach a settlement in the best interest of its shareholders within a few months.
Canam lost $39.7 million, or 88 cents per share, in the first quarter after taking the financial hit. That compared to a loss of $600,000 a year earlier, when it absorbed $3.9 million gain.
Sales in the quarter rose 48 per cent to $150.6 million.
Prior to the disclosure, analysts polled by Thomson Reuters had expected Canam’s sales to surge 62 per cent to $172 million.
The results were a big disappointment because the project didn’t go as planned, but Dutil said the company is normally well compensation for taking risks.
He noted that other large stadium projects such as the Marlins stadium in Miami was completed on budget and on schedule.
“We really feel this is not a breakdown of our capabilities, it’s a BC Place issue,” he added about the large retractable roof that is expected to be completed by August.
“The world’s first in anything comes with risks and challenges and now we’re faced with one of them.”
Canam announced Wednesday that Dutil will become CEO in January, replacing his father Marcel.
The company also announced it reached an out-of-court settlement over an acquisition five years ago. No financial details were provided because of a confidentiality agreement.
Meanwhile, Canam said Ontario remains a challenging market but other areas in Canada and the U.S. are showing signs of improvement.
The company’s backlog increased seven per cent during the quarter to $519 million as at March 26, 2011. This increase resulted from the addition of the backlog at the company’s Canam U.S. and FabSouth business units.
U.S. revenues increased 200 per cent from last year and the backlog for the joist and deck business is up 270 per cent, suggesting 2011 will be a better year.
It gross margin decreased to negative 16.9 per cent from 13.9 per cent a year ago as it sacrificed some profits to keep people as employed as possible, he told analysts during a conference call.
Canam designs and builds construction products and has more than 25 manufacturing plants and engineering offices in Canada, the United States, Romania, India and China.
The Montreal-area company has continued to suffer from a declining sales related to the slowdown in non-residential construction in North America.
Canam employs about 3,000 people and has partnerships with companies in Saudi Arabia, the United Arab Emirates and China.
Shares in the company gained three cents to $8.03 in afternoon trading on the Toronto Stock Exchange.
Video Link: http://www.youtube.com/watch?v=tfX_T9BpIug
For more information please visit us at: http://www.clearlease.com/Career-Opportunities.html
About Dominion Lending Centres Clearlease
Dominion Lending Centres Clearlease Commercial (DLC Clearlease/Clearlease.com) is a fully diversified Lease Finance Mortgage Banking Brokerage Company specializing in Equipment Leasing, Automobile Leasing, Residential, Commercial Lending/Mortgage Financing. DLC Clearlease possesses the capability to accommodate financing needs ranging from a small second Home Mortgage to a Multi-Million Dollar Commercial Projects. No mortgage is too small or too large for this integrated Company.
Equipment Lease Financing in Vancouver, Surrey, Delta, Richmond, Langley, New Westminster, North Vancouer, West Vancouver, B.C. Also offering Automobile Lease Financing and Mortgage information. Founded by the Pidgeon brothers.
You may have recently seen a Dominion Lending advertisement on such media outlets as: Global News, CTV News, CBC Television, Rogers Sportsnet or possibly heard the great Don Cherry, a Canadian Sports legend, discuss Dominion Lending Centres.
Contact DLC Clearlease.com:
Dominion Lending Centres Clearlease
HEAD OFFICE, Bentall Two, Suite 900, 555 Burrard Street, Vancouver, BC, V7X 1M8, CANADA.
Mr. A. Pidgeon, Editor in Chief
Tel: (604) 696-1221 ext. 177
eMail: [email protected]
Website: http://www.clearlease.com
News: http://clearlease.com/category/equipment-lease-blog/feed/rss
Twitter: @clearlease
###
Video Link: http://www.youtube.com/watch?v=tfX_T9BpIug