Shares in Decmil have rallied ahead of news the group had finally reached a peace deal in its $11 million stoush with subcontractor Southern Cross Electrical Engineering.
The three-year long legal battle centred around a $6 million contract Decmil awarded SCEE back in 2017 for works at Rio Tinto’s Amrun mine in far north Queensland.
But the relationship soured after SCEE claimed it had to carry out works beyond the scope of the contract and that its efforts had been hampered by Decmil’s inability to manage its work, resulting in significant delays.
With concerns about Decmil’s financial health, SCEE sought an $11 million pay out from Decmil under Queensland’s Security of Payment laws, but Decmil only handed over $1.4 million in extra costs.
When that pathway only recovered just over $150,000, SCEE embarked on a more lengthy arbitration process.
This morning, the two companies told the ASX they had reached final settlement of the dispute and that the arbitration proceedings would be terminated.
Decmil told the market the settlement was in line with its accounting position, but that the deal's terms would remain under wraps.
The announcement came just 24 hours after Decmil told the ASX it had no announcement pending.
Decmil’s share price has risen more than 41 per cent over the past 48 hours, trading at 21 cents per share this morning.
The company’s last half-yearly report indicated it had contingent liabilities in the order of $68 million.
That related to the dispute with SCEE and one with Sunraysia over a $277 million engineering and construction contract it held for a 255-megawatt solar project in New South Wales.
The settlement comes amid a difficult period for Decmil, which recently prepared its investors for a $102 million loss for the financial year after grappling with major supply chain issues, price escalations and border challenges as well as a change in leadership.