Multiplex founders in Wembley pledge

THE founders of developer Multiplex, which has warned it will only break even on the £750m Wembley Stadium job, have given an extraordinary guarantee for losses on the project in an effort to soothe investors' nerves.

Since the announcement of the problems at Wembley, Multiplex's share price has plummeted almost 20%. Now the Roberts family says it will pay up to A$50m (£19.4m) to Multiplex on any claims that it is unable to recoup from Wembley subcontractors.

'This indemnity demonstrates the confidence of the Roberts family in both the Wembley project and in management's ability to recover claims,' Multiplex said. 'The Roberts family have nevertheless advised they do not believe losses will emerge on the project and remain confident that claims will be sufficient to cover any additional costs.'

Multiplex was founded in 1962 in Perth, Western Australia, by current chairman John Roberts and has always been a family affair, even since its 2003 listing on the Australian Stock Exchange, which raised A$1.2bn.

The Roberts family holds a 26% of the group. As a private company, Multiplex was known as a secretive firm that guarded its privacy. As a public company, it has been forced into unaccustomed limelight with the latest furore over Wembley a rare damaging piece of negative publicity.

The company shocked the markets last week by reversing a previously booked profit on the project, saying litigation and higher costs from its change of steel contractor last year were to blame for eroding the expected profits of A$30m both this year and next.

'We have written the project back to a break-even situation,' Multiplex chief executive Andrew Roberts, John's son, said. He added that Multiplex was actively pursuing a range of claims against contracting parties, which the company believed would push it into profit on the project.

Construction of the 90,000-seat Wembley Stadium stopped last year as the company became mired in an industrial dispute with steel contractor Cleveland Bridge, which designed and built the stadium's signature arch. Cleveland was eventually replaced by Dutch company Hollandia.

But the damage to Multiplex's reputation has caused jitters in the Sydney, largely because the company had said at the time that the change of contractor would not hit the bottom line, promising that it would not 'affect the programme or impact upon group earnings'.

Multiplex is now relying on winning legal action to recover about £17m from subcontractors to break even on the project but says it could recover about double that amount.