Syntheo cuts losses on NBN work

Syntheo, the joint construction venture between Service Stream and Lend Lease, will walk away from any further work on the national broadband network, with Service Stream today forecasting a loss of $20 million on the joint venture.

Syntheo was blamed by NBN Co for a downgrade in premises passed earlier this year, but will now extricate itself from all of its NBN work, which had originally amounted to more than $650 million worth of contracts.

NBN Co said Syntheo "has committed to repaying NBN Co advances for overheads" as part of its exit.

Service Stream will today move out of the trading halt it has been under since June 11, with Syntheo stepping back from the NBN as soon as it completes construction work in progress in Western Australia and South Australia. 

The construction work still in progress is scheduled to be completed in early 2014, Lend Lease said in a statement to the market last night.

"SA Power Networks will become the prime NBN contractor in South Australia, in addition to Syntheo completing work in progress," NBN Co said.

"Downer EDI has begun construction in Western Australia, and NBN Co is scoping the prospect of bringing on additional construction capacity in the coming months in both states."

Syntheo handed back the remainder of its NBN rollout activities in the Northern Territory in March. At the time Service Stream said it expected to incur a one-time $3 million charge as a result.

Today, Service Stream said it had reached a new agreement with Lend Lease that will see Lend Lease control the delivery of Syntheo’s remaining NBN contract obligations. It is currently finalising refinancing of $52 million in debt.

Service Stream said the specific outcomes of a project review of its NBN contracts would remain confidential.