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Wai Kee buys into contract list
1. Wai Kee buys into contract list Wai
Kee Holdings, which owns disgraced construction firm Zen Pacific Contractors,
has bought a 50 per cent stake in Kier Hong Kong, the local offshoot of British
construction firm Kier Limited. The move has yet to be publicly announced by either
Wai Kee or Kier. But it means Wai Kee will be able to continue to win major public
works projects worth more than HK$300 million while Zen Pacific is still banned
from bidding for government or Housing Authority projects. Confirming the deal,
Kier International managing director John Dodds told The Standard: ``To the best
of my knowledge the deal has been completed and we have advised our clients and
staff.'' This includes the KCRC, Mass Transit Railway Corporation (MTR Corp) and
the government's Works Bureau. Speaking from Kier's British headquarters at Sandy,
Bedfordshire, Dodds added that the deal would allow Kier and Wai Kee to take Kier
Hong Kong forward. One insider said: ``With Zen Pacific's current work on the
Kowloon Canton Railway Corporation's West Rail project coming to an end, Wai Kee
was facing a major cash crunch. With Zen Pacific unable to tender and win further
work, Wai Kee was set to report a massive drop in earnings. The deal with Kier
is a strategic investment to maintain revenue flows.'' Another source said the
purchase was to maintain Wai Kee's eligibility to bid for government category
C contracts that were worth more than HK$300 million. ``Zen Pacific as a contractor
in Hong Kong is pretty much finished as regards government contracts. The tie-up
with Kier overcomes that obstacle,'' he said. Wai Kee also owns Leader Civil Engineering,
another civil works contractor it set up in 1996, but Leader does not have a class
C licence. No purchase price has been revealed for Wai Kee's stake in Kier Hong
Kong, although insiders said Wai Kee used the profits earned on Zen Pacific's
West Rail contracts to pay for the purchase. One insider said: ``We've been told
that Wai Kee paid up to HK$80 million for the 50 per cent stake in Kier Hong Kong.
Kier Ltd was prepared to sell its entire shareholding in Kier (Hong Kong), but
Wai Kee was happy with taking half.'' This followed a strategic reorganisation
by Kier in Britain under which the parent company moved into privately funded
infrastructure and building work and away from civil engineering, precisely Kier
Hong Kong's area of specialisation. One source said: ``Kier was keen to dispose
of the Hong Kong subsidiary because, with its emphasis on railways, roads and
water works, it no longer fitted into the parent company's future strategy.''
Aside from its West Rail contracts, which involve the construction of Mei Foo
and Tsuen Wan stations, Kier Hong Kong built part of the MTR Corp's Tseung Kwan
O line and the Pedder Street underpass. It also helped build Castle Peak power
station. One of the key issues facing Wai Kee was getting the government green
light to change all the existing licensing permits to show its involvement with
Kier (Hong Kong). Wai Kee and Zen Pacific management saw this as a particularly
sensitive issue given that Zen Pacific is still banned from bidding for government
and Housing Authority projects. This followed a scandal in 2000 after Zen Pacific
won a HK$63 million piling contract for two Housing Authority tower blocks. Only
about half of the 130 piles were built to the correct depth. The two blocks in
Sha Tin started to lean and had to be demolished. It was later revealed that Zen
Pacific won the piling contract with a price that was 50 per cent cheaper than
the engineer's estimate, but subcontracted the entire project to another firm. [Source:
The Standard, 3 June 2002] |  |
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