Aggreko in ‘discussions’ on $250m Olympic contract

Glasgow-based temporary power generation giant Aggreko plc said on Tuesday it will “enter detailed discussions” with the Tokyo Organising Committee of the Olympic and Paralympic Games (TOCOG) about its power supply contract following the postponement of the Games.

In a stock exchange statement, Aggreko said: “Aggreko plc notes the recent announcement by the International Olympic Committee (IOC) and The Tokyo Organising Committee of the Olympic and Paralympic Games (TOCOG) postponing the 2020 Tokyo Olympic & Paralympic Games (the Games) until a date beyond 2020, but not later than summer 2021.  

“Following this decision, we will now enter detailed discussions with our client, TOCOG, regarding our role in supporting the Games to a later timetable. 

“While we have a contract that provides a framework for these discussions, the commercial terms and operational impact surrounding the postponement will need to be worked through in detail with TOCOG. 

“As a reminder, the initial contract value was c.$200 million although, as we confirmed at the time of our results announcement on 3 March, following various scope changes we expected the contract value to increase to around $250 million.  

“At this point, we have received $98 million in milestone payments under the contract.”

“As noted in our announcement of 23 March, we are in a strong financial position.

“We have considered a range of scenarios to stress-test the group’s liquidity position through to the end of this year, including the situation in which the Games do not take place this year. 

“These show that even in a reasonably probable worst case scenario, with appropriate mitigating actions, we expect to remain within the group’s financial covenants, while maintaining headroom under our existing committed facilities.”