| Subject: Re: 2002-05-30 One link 65 million |
Author:
Steve Bonkers.
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Date Posted: 06:38:38 06/06/02 Thu
In reply to:
Steve Bonkers
's message, "2002-05-30 One link 65 million" on 06:31:38 06/06/02 Thu
ERGLIMITED2002-05-30 ASX-SIGNAL-PerthGHOMEX ----------------------------------------------------------- +++++++++++++++++++++++++
The ERG Group today announced that its partly owned subsidiary,OneLink Transit Systems, has reached a $65 million staged settlementwith the Victorian Government for all outstanding claims in relationto the Automated Ticketing (AT) System in Melbourne.
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Out of the settlement proceeds, $45 million will flowdirectly toERG. ERG will also be paid an additional fee of $2.85 million peryear ever the next five years (totalling $14.26 million) to enable itto meet the higher performance standards which include management of
vandalism. In addition, OneLink will pay ERG a fixed fee of $1.9million per year for management of vandalism over the next five years(totalling $9.5 million). However, ERG will be subject to penaltiesof up to $2 million a year if agreed performance levels arenotachieved.
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The settlement is in addition to the existing contractual
arrangements under which OneLink is due to receive approximately $250million in payments over the remaining five years of the contract.
Over that period, OneLink is also due to repay ERG approximately $35million for the supply of the equipment and software ERG provided forthe AT System.
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The claims resulted from the installation of the AT System under theKennett Government between 1994 and 1998.
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Under the terms of the settlement, the Victorian Government, OneLinkand the transport operators have agreed to a new regime that willdeliver a major improvement in the operations of the AT System. Apress release issued by the Victorian Minister for Transport andMajor Projects, Mr Peter Batchelor, is attached.
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The new agreement between the Victorian Government and OneLinkprovides for full and final settlement of all outstanding claimsbetween the parties, following the successful completion of a trialperiod, in consideration of payments totalling $65 million toOneLink. Of this, $25 million will be paid immediately and payment of
a further $20 million will be made when the full agreement has beendocumented (which is expected in the next 30-90 days). Payment of thefinal part of the settlement proceeds ($20 million) will be deferreduntil OneLink hasdemonstrated that it is meeting new customeravailability standards.
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The agreement also provides for OneLink to receive an additional $3million (of which $2.85 million will be paid to ERG) each year overthe remaining five years of the contract if it is able to achieve newperformance measures that incorporate the management of vandalism.
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OneLink will also be able to earn bonus payments if revenue collectedby the AT System increases and OneLink's. Performance exceeds agreedlevels. OneLink will face penalties with a Maximum value of $2 million
each year if it falls to reach satisfactory performance levels. TheVictorian Public Transport Corporation will have expanded rights toterminate the contract if performance levels fall below contractualrequirements for an extended period (eight months).
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ERG's Chief Executive, Mr Peter Fogarty, welcomed the settlement withthe Victorian Government, which followed a complex negotiationprocess.
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"We are extremely pleased that we have reached a solution with theVictorian Government that lays the foundation for a significantimprovement in the operations of Victoria's AT System.
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"The settlement reflects the willingness of all the parties involvedto work together to ensure their Victorians get an efficient andreliable automated ticketing system."
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Late last year, the Miller Report on Victoria's AT System concludedthat vandalism was significantly impairing the system's performance.
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The report recommended increased cooperation between OneLink, theprivate transportoperators and the Victorian Government (includingthe Victorian Police). That cooperation has already seen a markedImprovement In the AT system performance. A working committeeconsisting of the three parties, which was set up in the wake of the
Miller Report to review the system's performance and to recommendappropriate changes, will continue to operate.
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