The Panama Canal Authority said it reached an outline deal with Sacyr SA (SCYR) to end a budget dispute, even as it continues to consider alternatives to get the waterway’s expansion finished. Sacyr rose to a three-month high.
Jorge Quijano, chief of the authority known as ACP, told lawmakers in Panama City that an “agreement in principle” was reached and the Sacyr-led group has accepted that it won’t receive additional funds outside the terms of the contract. Still, a written deal hasn’t been signed and getting other companies to finish the work remains an option, he said.
“It’s when you sharpen your pencils that commas start appearing in the wrong places,” Quijano said. “If we have to take the other route, which may be painful, we won’t hesitate.”
The builders suspended work to expand the canal last week, making good on a threat issued in December, as they demanded help from the waterway’s management to finance a $1.6 billion cost overrun. The excess costs amount to about half the initial budget to build a new set of locks, which will allow the canal to accommodate larger ships and help reduce transport costs for commodities such as liquefied natural gas.
Shares in Madrid-based Sacyr rose 4.7 percent to 4.03 euros. Milan-based Salini Impregilo SpA (SAL) rose 1.8 percent.
“It’s good news for Sacyr but we still don’t have the details of the agreement,” Juan Moreno, an analyst at Ahorro Corp. Financiera in Madrid, said in a phone interview.
A Sacyr official declined to comment on the Canal Authority’s announcement.
Indebted Spanish builders are increasingly reliant on foreign projects amid public works spending cuts and a real-estate market struggling to absorb surplus homes. More than half of Sacyr’s revenue comes from foreign markets, and 25 percent of its 1.32 billion euros of nine-month international revenue came from Panama, according to the company’s latest earnings report. Of the company’s 5.53 billion-euro construction order book, 82 percent comes from overseas, the report showed.
To contact the editor responsible for this story: Emma Ross-Thomas at email@example.com