Duro Felguera will have to provision part of his conflict in Algeria to be able to return to trading. The company that faces a claim of 413 million by Sonelgaz for breach of contract to build a combined cycle plant in Djelfa, had not recorded any risk in its accounts until now. After the arbitration became official before the Algerian Chamber of Commerce and Industry, the CNMV suspended it from trading and has now forced it to record a provision of 100 million euros in its accounts from 2022 to recognize the existing risk.
The company controlled by the Prodi Group (55%) explained this Friday in a statement that next week it will meet to reformulate the accounts for 2022, 2023 and the first half of 2024 after, it assures, a change in the criteria of its advisors ” confirmed by the National Securities Market Commission (CNMV)”.
Thus, a provision of approximately 100 million euros will be made. “This change in criteria on the accounting treatment of the Djelfa Project is based on the execution scenario of the entire project, which considers the updating of costs of the initial budget without any type of economic rebalancing on the part of the client and the maximum amount of penalty for the delay that has been in dispute since fiscal year 2021,” he justifies.
Despite already adding a negative net worth of 98 million euros – the amount of which will grow due to the provision – Duro Felguera says that the net worth of the parent company for commercial purposes “remains positive.”
The judicial conflict with Sonelgaz
In parallel with the accounting reformulation, the company chaired by Eduardo Espinosa will continue its judicial fight with Sonelgaz. The company will present its written opposition to the arbitration request before December 10 “rejecting the claim upon understanding that the suspension of the contract is in accordance with the law due to the breaches in which Sonelgaz has occurred.”
In addition, the listed company intends to claim around 200 million in damages from the African energy company.
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