Sharechat Logo

ASX-listed Cimic to get lion's share of work in $750M Waikeria prison build

Thursday 14th June 2018

Text too small?

ASX-listed Cimic Group says it will deliver most of the work in the government's new 500-bed prison in Waikeria plus mental health facilities for a further 100 people.

Corrections Minister Kelvin Davis yesterday announced the replacement prison, shifting away from a much larger facility planned by the previous administration to cope with a swelling muster. Davis said Cornerstone Infrastructure Partners was the preferred bidder for the $750 million project and that a deal would likely be signed in August.

Separately, Cimic said its subsidiaries CPB Contractors and Pacific Partnerships led the formation of the favoured public-private partnership consortium, and will provide equity financing for the 25 years of asset management and maintenance, while also designing and building the facility. Local investment bank and asset manager HRL Morrison & Co will also provide finance and management, real estate services firm Cushman & Wakefield will act as property manager, and Honeywell will look after electronic security services.

"Our New Zealand team has been working with the client on various scenarios that will ensure the Department of Corrections achieves its objectives for improved education, rehabilitation and enhanced mental health services," Cimic chief executive Michael Wright said in a statement yesterday. "Our focus is on delivering a superior facility that complements Correction’s current operating model, enabling the government to achieve its required outcomes over the long-term."

Cimic said revenue from the deal will be finalised once the contract is executed, probably in the third quarter of this year, with the facility set to open in 2022. The shares rose 0.7 percent to A$40.68 today, having dropped 21 percent so far this year.

In last month's budget, Finance Minister Grant Robertson earmarked $198 million of new capital spending to accommodate an extra 600 prisoners in rapid-build modular units by the end of next year, with $393 million allocated to renew and replace assets in the 2018/19 year, and a further $332 million of capital spending estimated in the following three years.

Australia's Decmil Group has already been a beneficiary of the Corrections Department's need for rapid expansion, winning a $60 million contract last year to build three sets of 126-bed units for lower security prisoners, two at Rolleston Prison and one at Tongariro Prison. Decmil's biggest corrections project in Australia is the A$415 million Manus Island offshore processing centre, which it finished building in October 2015.

Documents accompanying Davis's speech announcing the smaller prison said any innovations that benefit the facility may be picked across the broader prison network. Davis said yesterday the government's next step is to add 400 beds across the network, and that the government is working on long and medium term plans to address prison population concerns. That includes analysing different operating models and infrastructure, with a view to developing a strategy in the next six months.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares at fresh high, Vector, A2 gain while Pushpay, Comvita drop
NZ dollar benefits from USD weakness after Trump complains about rate rises
Gold Report 21st August 2018
FlexiGroup's NZ cards business outpaces credit growth; bad debt ticks up
Tilt strategy still emerging - Mercury
Healthscope's NZ pathology shares efficiencies with DHBs, stalling earnings growth
Government to make new 'red zone' payment for uninsured homes
Port Taranaki lifts 2018 dividend on increased profit
NZ net migration continues slow in July as long-term visitors pack up and leave
Super Retail's annual earnings boosted by Macpac acquisition, online sales

IRG See IRG research reports