Sharenet Sites 
Sharenet Sites
Al Mafraq Hospital Project Guarantees Drawn Down Against HLMR Joint Venture
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN: ZAE000073441
(“Murray & Roberts” the “Group” or the “Company”)
AL MAFRAQ HOSPITAL PROJECT BONDS DRAWN DOWN AGAINST HLMR JOINT VENTURE
– MURRAY & ROBERTS LIMITED PURSUING LEGAL DEFENCES
Stakeholders are referred to the Group’s FY2020 annual results announcement released on SENS on
26 August 2020. Murray & Roberts reported that its final four projects in the Middle East had been
completed during FY2020, following on the Group’s FY2016 decision to close the business in the Middle
East. The Company reported that post the reporting period, notice to draw down on two surety bonds
for a single project was issued by a client in the Middle East and that the Company’s legal team was
vigorously defending its position.
Al Mafraq Hospital project completion and claim process
The Habtoor Leighton Group/Murray & Roberts Contractors (Abu Dhabi) LLC (“HLMR”) joint venture
constructed, fitted out, equipped and handed over the Al Mafraq Hospital in Abu Dhabi to its client circa
18 months ago. The final taking-over certificate was dated 31 July 2019. Murray & Roberts Contractors
(Abu Dhabi) LLC is a 30% participant in the joint venture.
Early in 2020, HLMR submitted a claim against its client for the balance of the contract amount in the
Abu Dhabi court. This claim has been stayed on two occasions by mutual agreement, while the parties
engaged in amicable negotiations to settle the claim. These amicable negotiations included having a
third-party expert evaluate the amounts in dispute, which expert issued its report today, 18 January
2021, and found substantially in favour of HLMR on matters of principle and entitlement.
Draw down of project Performance Security and Loan Guarantee
In 2011 and 2016 respectively, a Performance Security and a Loan Guarantee were issued by a Dubai-
based bank (“the Bank”) to the client on behalf of the joint venture. Murray & Roberts Limited supported
Murray & Roberts Contractors (Abu Dhabi) LLC by issuing parent guarantees to the Bank for 33% of
the two security instruments, which at current exchange rates amounts to circa R650 million.
On 21 July 2020, notwithstanding the process of amicable negotiations, the client instructed the Bank
to pay out on the Performance Security of AED221 million (notwithstanding that the project has been
completed and handed over in July 2019) and a Loan Guarantee of AED253 million (notwithstanding
that the client owes HLMR the balance of the contract price, which is still under negotiation).
While the client over the past six months continued to demand that a pay-out be effected, a number of
actions and initiatives on the part of both HLMR and the Bank resulted in such being averted. HLMR
has consistently maintained there is no basis for the pay-out to be made, as the project had been
completed to specification and the fully functioning hospital has been in use for over a year; and HLMR
had (and has) a reasonable expectation that HLMR’s claim against the client would be resolved through
amicable negotiation, assisted substantially by the input of the third-party expert.
On 16 January 2021, without formal notice, the Bank debited the joint venture bank account with
AED474 million, placing the joint venture account into overdraft of an equivalent amount, and paid the
funds over to the client. HLMR considers this instruction by the client to have been issued in utmost bad
faith.
Murray & Roberts pursuing legal defences
The Bank has no direct access to the funds of Murray & Roberts Limited, and will have to pursue a claim
under the parent guarantees in the normal course. The pay-out under these bond securities is not
expected to have any income statement impact, nor any direct cash flow implications for the Group.
Murray & Roberts Limited has already placed the Bank on formal notice that it will resist a call against
the parent guarantees, as the bank was fully aware and on notice that the claim by the client against the
Performance Security and Loan Guarantee was without cause.
To this end, to protect the parent guarantees it has issued, Murray & Roberts Limited will pursue its
defences in both the offshore courts in Dubai, as well as the courts in South Africa. The Group will
continue to provide further updates to stakeholders as appropriate.
The information contained in this announcement has not been reviewed or reported on by the
Company’s external auditors.
Bedfordview
18 January 2021
Sponsor
The Standard Bank of South Africa Limited
Date: 18-01-2021 04:15:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
