Three French firms - Alstom (Euronext: ALO; LSE:ALS), Veolia Transportation (formerly Connex), and Vinci SA (Euronext: DG) - recently asked the Ministry of Finance to reopen the tender for the Tel Aviv light railway's Red Line, in view of the difficulties of the tender's winner, Metro Transport Services (MTS), in securing financing. The three companies were members of the Metro Rail consortium that lost the tender in favor of MTS, the consortium headed by Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY).
In a statement to the Office of the Accountant General, the three French companies said that they were prepared to immediately reopen talks with the Israeli government and build the light railway line at the same terms proposed by MTS.
The other members of Metro Rail were Arison Holdings Ltd. unit Shikun u'Binui Holdings Ltd. (Housing and Construction) (TASE: HUCN), Ashtrom Properties Ltd. (TASE:ASPR), and Zublin AG. Veolia Environnement SA (NYSE: VE; Euronext: VIE) acquired Connex and renamed it Veolia Transportation.
In late 2006, Metro Rail was underbid by MTS in the tender by NIS 400 million. Metro Rail proposed a government set-up grant of NIS 7.5 billion compared with MTS's offer of a set-up grant of NIS 7.1 billion. Metro Rail was liquidated six months ago, when its Israeli partners refused to extend their financial guarantees.
Although, officially, the offer by Alstom, Veolia, and Vinci contravenes the tender terms, it may increase the pressure on MTS in its negotiations with the Ministry of Finance on the franchise terms for the light railway.
Because of the global crisis, MTS has missed the deadline for securing financing, despite three postponements since May 2008. Nevertheless, MTS and the Ministry of Finance are continuing, and a number of meetings were held last week in an effort to reach commercial understandings.
MTS comprises Africa-Israel, Egged Israel Transport Cooperative Society Ltd. and Siemens AG (NYSE: SI; XETRA: SIE), China Civil Engineering Construction Corporation (CCECC), and Sociedade de Construcoes Soares da Costa SA of Portugal.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2009
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