Yongnam

Yongnam: Yongnam led consortium was awarded the USD1.4b Hanthawaddy International Airport concession for a period of 30 years. The consortium will design, construct, operate and maintain the airport. Completion target date for the airport is Dec’19. The other two parties in the consortium are Changi Airport Planners and Engineers and JGC Corporation, a Yokohama based global engineering company. The consortium will enter into advanced discussion and negotiation with Myanmar’s Department of Civil Aviation to finalize details. Recall, the Yongnam led consortium was re-invited by the Myanmar government to bid for the HIA concession, after Incheon International Airport Corp walked away from the deal it had originally won in August’13. According to the director general of Myanmar’s civil aviation department, the Koreans walked away when the Myanmar government would not agree on the amount Incheon International Airport would be paid if the contract was terminated before completion. It was also reported that Myanmar authorities were unable to guarantee electricity and water supplies to the site during construction. Meanwhile, on financing, it is understood that the Yongnam consortium has secured a 49% financing from Japan’s international development arm. Yongnam has been unloved for a while now, crushed by negatives ranging from cost overruns to unfavorable project mix, over the past few quarters. Share price spiked yesterday before the announcement of this news. If the street views this deal positively, the rebound may continue.