Tel Aviv light rail co wants talks, not hearing

MTS: A hearing is unacceptable under the terms of the franchise contract.

Sources inform ''Globes'' that Tel Aviv light rail franchisee Metro Transport Solutions (MTS) has rejected a government request for a hearing on a possible cancellation of the franchise contract. In a letter sent yesterday to the Ministries of Finance and Transport, MTS said that a hearing was unacceptable under the terms of the contract. The consortium added that wanted to renew talks on the financial closing for the project from the point at which they were derailed a few months ago.

MTS is a consortium comprising Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), Egged Israel Transport Cooperative Society Ltd., Siemens AG (NYSE: SI; XETRA: SIE), China Civil Engineering Construction Corporation (CCECC), and Sociedade de Construcoes Soares da Costa SA of Portugal.

MTS attributed the delay in the financial closing to the global financial crisis, which raised the project's financing cost. Without explicitly saying so, the company implied that it wanted another extension, this time of two months, to secure the financing.

Two weeks ago, Accountant General Shuki Oren, Budget Director Udi Nissan, and Ministry of Transport director general Yaakov Ganot summoned MTS executives to a meeting, ahead of a possible cancellation of the franchise contract.

A source close to MTS's shareholders said, "The banks no longer consider Africa-Israel as the company for leading the project, so any solution must first involve replacing it, and bringing in an alternative partner."

Companies that have expressed an interest in Africa-Israel's share in MTS include Shari Arison-controlled Shikun u'Binui Holdings Ltd. (TASE: SKBN) and Shafir Civil and Marine Engineering Ltd., but any deal depends on progress in the talks on the franchise's terms and the financial closing.

Another source close to MTS said in response, "We think that a hearing is not the right way. We hope that there will no need for legal proceedings. We want to continue to move forward in the negotiations in an effort to solve the problems and achieve financial closing."

Published by Globes [online], Israel business news - - on November 16, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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