Samsung seizes $68m bond at Roy Hill
A JUDGE has allowed Roy Hill iron ore project manager Samsung C&T to seize $68 million in security bonds from Spanish manufacturer Duro Felguera.
It was Samsung’s second Supreme Court win over Duro Felguera in regard to bonds, bringing to $132 million the total securities the Korean construction giant has taken from the subcontractor.
Samsung has fought legal battles on multiple fronts with subcontractors and Gina Rinehart’s majority-owned Roy Hill Holdings.
It is taking an estimated $1 billion loss on the Pilbara project. Under a $506 million contract, Duro Felguera manufactured and supplied equipment and systems for the $10 billion project’s processing plant and port facilities.
The critical infrastructure has suffered teething problems before and after Roy Hill first ore shipment sailed last December.
The latest judgment came despite adjudicators determining Samsung should pay Duro Felguera about $70 million.
Justice Rene Le Miere ruled the determinations — which Samsung has challenged — were inadmissible. Samsung on the other hand told the court of claims against Duro Felguera of up to $110 million. That includes $64 million liquidated damages for project delays and $16 million for defective works.
Duro Felguera argued its reputation and cashflow would suffer by the bonds being seized. Justice Le Miere said he was not satisfied by those arguments.
“The risk of hardship and the risk of damage to reputation were risks assumed by Duro when it agreed to provide securities,” he said. The contract disputes are ongoing.
Last December, the court sanctioned Samsung taking $64 million bonds issued on behalf of Duro Felguera for a defunct joint venture with engineering company Forge Group.
Duro Felguera signed a new contract with Samsung in 2014 after Forge suffered a financial collapse.
Samsung claimed the effect of Forge’s withdrawal from the project cost the head contractor more than $180 million. – au.news.yahoo.com
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette