Aleatica (ex-OHL Concesiones) has removed developer OHL from highway EPC contracts in Colombia and Mexico and started legal action against the Spanish company in Mexico.
A permanent loss of either EPC contract would hurt OHL’s bottom line as it generated 24.4% of its sales from the Latin American region in 2018, according to public filings.
Aleatica’s owners, Australian asset manager IFM Investors, acquired 100% of OHL’s concession businesses in Latin America, and Spain in 1H18 for EUR 2.2bn (USD 2.64bn), thus consolidating its control over OHL’s international concessions after acquiring over 85% control of OHL Mexico in mid-2017.
In a 9 April statement to the Mexican stock exchange, Aleatica said that its highway subsidiary Concesionaria AT-AT presented a demand against OHL’s Mexican construction subsidiary Constructora de Proyectos Viales de México (CPVM) to the Center for Arbitration in Mexico and removed it from the project.
The demand requests that a tribunal confirm serious non-compliances in CPVM’s performance of the EPC contract and pay AT-AT compensation for damages the company has suffered.
Aleatica will seek a new EPC contractor to continue the works, according to an 8 April statement.
OHL Concesiones won the contract for the USD 448m, 80-km highway in March 2014 and financed the project in September 2017 with debt from Banobras, Inbursa and Santander.
In a 9 April statement, Aleatica’s Colombian subsidiary Autopista Río Magdalena said that it was removing the EPC contract for the Magdalena River Highway 2 from OHL due to significant delays in the construction of the highway and because the construction company could not demonstrate the correct use of COP 150bn (USD 48.36m) it had paid it for works.
In its Colombian statement, Aleatica says that the company is focused on making the necessary adjustments, replacing the construction company, financing the project and restarting the works when reasonably possible.
Aleatica said that Autopista Río Magdalena has invested COP 600bn of its own capital in the project and has not yet received any payment from the Colombian government for the project.
Aleatica is considering its options regarding possible legal or contractual actions that may be available to it.
OHL Concesiones won the contract for the USD 686m, 150km Magdalena River 2 highway in October 2014 but the concession has not yet secured any financing.
OHL responded with a 9 April statement on the Spanish stock exchange CNMV, saying that the company has been surprised by the accusations and is in “complete disagreement with the resolutions of both contracts (in Colombia and Mexico) for not having, in its opinion, any legal basis.”
OHL said it understands that Aleatica’s move is motivated by arbitration proceedings for breach of contract initiated by OHL against Aleatica’s Colombian subsidiary for the Autopista Rio Magdalena (Colombia) on 30 November 2018 and against AT-AT (Mexico) on 4 April 2019.
“The resolution of the contracts adds to the serious contractual breaches of the Concession Companies of the Aleatica Group and as a consequence OHL will adopt the legal measures that correspond in defense of its interests,” the Spanish company said in its statement.
Aleatica declined comment on the situation. OHL did not respond to a request for comment.