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Highlights
Fletcher Building (ASX:FBU), a prominent name in the construction and building products sector, saw its share price weaken in early trading following the announcement of legal action by SkyCity Entertainment (ASX:SKC). Both companies are listed on the Australian Securities Exchange and are part of the broader market tracked by the ASX 200.
SkyCity has initiated court proceedings seeking damages in relation to extensive delays associated with the New Zealand International Convention Centre (NZICC), a high-profile development in Auckland. The project has experienced significant postponements, which SkyCity attributes to failures in execution by the contractor, Fletcher Building.
Allegations of Contractual Breach and Negligence
According to the legal claim, SkyCity alleges Fletcher Building breached its contractual obligations during the construction phase. The statement includes strong accusations of "gross negligence" and "wilful neglect," characterising the delay as a failure to uphold critical project responsibilities.
SkyCity contends that the continued postponements have caused financial harm, prompting the pursuit of substantial damages. The company had reportedly attempted to resolve the matter outside of court but was unsuccessful, leading to the current legal route.
Fletcher’s Response and Financial Provision
In response to the claim, Fletcher Building has acknowledged prior payments made in the form of liquidated damages. The company maintains that it has met its obligations in completing the construction and intends to contest the lawsuit.
Fletcher has announced it will record an additional provision due to re-evaluated final-stage costs for the NZICC. The group is preparing to officially hand over the site ahead of the planned opening, which remains scheduled for the coming year.
Market Reaction and Share Movement
Fletcher Building shares declined on the back of the announcement, reflecting investor concerns around the scale of the legal claim and possible financial implications. Meanwhile, shares of SkyCity edged slightly higher, potentially influenced by the assertion of its legal position.
The situation marks a significant development in the long-running NZICC project and underscores the contractual tensions that can emerge in large-scale infrastructure ventures. The outcome of the legal proceedings may carry further ramifications for both companies involved and is being closely watched across the construction and gaming sectors.
