Toronto, Ontario – July 30, 2009: Aecon Group Inc. (“Aecon”) (TSX:ARE) today disclosed that the Constitutional Court of Ecuador issued a ruling late yesterday regarding airport charges and services, which may have an impact on Aecon’s concession interests in Quito, Ecuador. The ruling is approximately 60-pages in length and still being assessed.
Attached is a first analysis from the Canadian Commercial Corporation (CCC), the federal Crown corporation that holds the direct contract with the Municipality of Quito for the construction of the New Quito Airport. The CCC is mandated to promote and facilitate international trade on behalf of Canadian industry, particularly within government markets.
“While we are still analyzing the ruling, it is important to remember that this ruling in no way addresses the Ecuadorian government’s intentions toward the New Quito Airport project,” said John M. Beck, Chairman and CEO, Aecon Group Inc. “I am hopeful that we will receive a clear indication soon that the government intends to respect all of its contractual obligations so that we may complete this important infrastructure project.”
Aecon has a 45.5% economic interest in the Quito airport concession through its stake in Corporacion Quiport S.A (Quiport), which holds concession rights to the airport. The grantor of the concession on behalf of the Municipality of Quito is Corporacion Aeropeurto y Zona Franca del Distrito Metropolitano de Quito (CORPAQ). The new airport is being constructed under a 51-month contract signed between CORPAQ and the Canadian Commercial Corporation (CCC). The CCC, in turn, has subcontracted 100% of the approximately US$415 million in construction work to a 50/50 joint venture consisting of Aecon and Andrade Gutierrez Constructores, one of the largest construction companies in Brazil.
Aecon Group Inc. is Canada’s largest, publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and on a selected basis internationally. Aecon is pleased to be recognized as one of the 10 Best Employers in Canada as published by Report on Business Magazine, as well as one of the Top 100 Employers in Canada as published in Maclean’s Magazine.
The information in this news release includes certain forward-looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties which are generally described in Section 3.2 "Risk Factors" in Aecon’s Annual Information Formdated March 30, 2009 available on SEDAR at www.sedar.com. Although Aecon believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurance that the expectations of any forward-looking statements will prove to be correct.
Reaction to July 29, 2009 Ruling of Ecuador’s Constitutional Court
on the Issue of Concessional Airport Revenues
These judgments seem to go in a direction contrary to what CCC and other Canadian investors heard from President Rafael Correa during a two-hour discussion on February 16, 2009, and as such may not signal the intention of the government to take any action contrary to the current arrangements in place for the existing Mariscal Sucre International Airport and the new Quito International Airport.
The President has recognized publicly the legitimacy of concessions as ideal models to increase foreign investment in Ecuador, particularly for large infrastructure projects (transportation, mining) in which Canada is currently the largest foreign investor. The President spoke highly of concessional approaches that include design, build, operate and finance elements, and recognized as reasonable that profits would be due to those who put their capital at risk and choose to invest.
As such, it is our hope and expectation that the government of Ecuador will continue to honour the spirit and the letter of all contractual agreements in place in respect of the existing Mariscal Sucre International Airport and the new Quito International Airport.
The Canadian Commercial Corporation has not been approached, neither formally nor informally, to discuss any changes to the contracts related to the airport. Notwithstanding the declarations of Ecuador’s Constitutional Court on July 29, 2009, CCC and the Government of Canada, as prime contractor for the construction of Quito’s new international airport, plan to continue respecting the contracts that were negotiated in 2005, and see no rationale as to why Ecuador would not do the same.