Contractor CIMIC Group Ltd could accumulate $200 million in penalties if the Wynn Palace resort experiences further delays.
In a voluntary announcement to the Hong Kong Stock Exchange on Wednesday, Wynn Ltd. said that it had issued a letter to CIMIC subsidiary Leighton Contractors (Asia) Ltd to reinforce the importance of meeting Wynn Palace’s scheduled June 25th opening date.
In a letter, Macau expressed its concern regarding Leighton’s level of progress in the execution of work and expects the contractor to fail to meet its third interim milestone ((tower fit-out of floors 10 to 15).
Wynn also said that CIMIC is liable to pay $200,000 per day for any delay and estimated a total penalty between $8 million and $10 million by the end of February.
Leighton has previously incurred a $1 million fine for not meeting the first interim milestone in January 2016.
“Your liability for payment of delay damages up to the end of January 2016 is likely to amount to an additional US$6.2 million,” said Wynn. “Your total aggregate potential liability under the Contract for delay damages is US$200,000,000.”
Leighton also faces losing its eligibility for an early completion bonus of approximately US$38,000,000.
Michael Weaver, spokesman for Wynn Resorts, said that the company is not announcing any delay yet.
CIMIC won the $2.5 billion contract to build Wynn Palace resort in Macau in 2013. In November, Leighton notified Wynn that it couldn’t complete the casino resort by the previously announced March 25 opening, which led to a three-month delay to June 25, 2016.
The $4.1 billion resort will feature 1,700 hotel rooms, a lake with gondolas and fountains, meeting space, a casino, a spa, stores and food-and-beverage outlets.
