[NZ] Further delays in Vector Arena completion

Richina Pacific's Mainzeal contruction arm has again delayed the finish date for the $80 million Vector Arena in central Auckland, forecasting more cost overuns for a project that is already a year overdue.

Mainzeal was supposed to have completed the 12,200 seat covered stadium in the middle of last year, but a spate of problems, including alterations to its unusual curved roof, have plagued the project and inflated costs by up to $12 million.

The delays forced rock band Coldplay and rap star 50 Cent to sidestep Auckland this year because it is the only purpose built covered stadium suitable for concerts of that size.Earlier this year Richina Pacific pushed back the initial mid-2005 deadline to the end of August this year, but chief executive Richard Yan said this deadline would now not be met. He would not say when the arena would be completed by. "But it would be well before the end of the year," he said.

Releasing its half-year results on Tuesday Richina Pacific said that there would also be some additional cost over-runs from the project.

Mainzeal had earlier made a provision of US$7.3 million ($12 million) for losses on the arena as well as an Auckland apartment block. Mr Yan - who relocated to Auckland earlier this year to sort out the poorly performing Mainzeal - said there would now be a "small amount" of additional losses but he would not say how much.

Mainzeal has also taken legal action against the US architecture firm - Crawford Architects - that designed the arena for $1 million. Mr Yan said he believed they had a very strong claim against the firm. "It's going through the normal legal process and will probably take a couple of years."

Richina Pacific posted a after tax profit of US$3.6 million (NZ$5.7 million) for the six months to June 30, up 15 per cent on the year before. Revenue was US$240.2 million, up 2.1 per cent. However the company's operating cashflows were minus US$13.1 million compared to minus US$8.3 million in the June 2005 half.

Richina Pacific had US$17.93 million in cash on hand at the end of June.

Mr Yan said the company typically used cash in its first half to build up stock. This year the negative cashflow situation had been exacerbated by the losses from the arena and Scene Apartment projects, he said. Even though Richina made provisions for the losses last year "the actual physical cash goes out as we finish the projects, Mr Yan said.

Listed in New Zealand and headquartered in Kuala Lumpur, Richina has most of its assets in China, where it owns about 20 subsidiaries - mainly in leather-related industries - bought from the Chinese government.

The company's strategy is to convert many of its industrial sites in and around Shanghai into commercial property developments. Richina said it expected to deliver an improved second half result.

Source: http://www.stuff.co.nz