Service Stream has requested an extension of its trading halt on the Australian Stock Exchange amid reports it is looking to offload its Syntheo joint venture.
Service Stream issued a statement to the ASX on 11 June announcing a trading halt. Today's notice is the second extension of the halt the company has requested.
Syntheo is a 50/50 joint venture with Service Stream and Lend Lease and is responsible for construction of the National Broadband Network in Western Australia and South Australia, after handing back work in the NT to NBN Co.
The Australian Financial Review reported the joint venture is on the “brink” of pulling out of its involvement in the NBN.
The Australian has also reported the company is looking to negotiate out of the joint venture.
Service Stream said it has now completed a review around Syntheo and will record a loss in its FY2013 results due to the joint venture. The company previously said it would incur a $3 million loss due to its exit from NBN work in the NT.
“The company requires a further period of time to complete ongoing discussions in respect to matters outstanding relating to the Syntheo joint venture, arrangements with NBN Co on project completion assumptions and negotiations with our banks on re-financing our facilities,” Service Stream said in an ASX statement.
The construction company has requested the trading halt stay in place until discussions around Syntheo are finalised. It has not specified an end date for the trading halt, but said it would be no later than 15 August when it releases its full year results.
Syntheo has been a key construction partner with NBN Co for the rollout of the fibre network in several states, but it has struggled to meet its construction targets.
In mid-February this year NBN Co downgraded its June 2013 target for the number of premises passed due to construction delays from the joint venture.
Syntheo was responsible for passing 48,620 premises in SA, WA and the NT by June 2013 – 17 per cent of the 286,000 target for June.
Communications minister Stephen Conroy recently told Computerworld Australia NBN Co made the decision to downgrade premises passed targets for June despite construction partners “arguing they could still meet their targets”.
Syntheo was due to front a parliamentary hearing about its involvement in the construction delays for the NBN, but failed to show and instead sent a Lend Lease representative who was unable to answer questions regarding Syntheo's role in the delays.
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