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Bakers helps maintain partnership

Bakers helps maintain partnership

BAKER & MCKENZIE helped renegotiate and rewrite the entire project documentation for the $400 million refurbishment of Melbourne’s Southern Cross Station (formerly Spencer Street Station). The…

BAKER & MCKENZIE helped renegotiate and rewrite the entire project documentation for the $400 million refurbishment of Melbourne’s Southern Cross Station (formerly Spencer Street Station).

The station is now owned and operated by Civic Nexus, which took over the station last month as part of a public private partnership (PPP).

Bakers acted for the Southern Cross Station Authority, the government body tasked with managing the redevelopment of the station.

The law firm said renegotiations were driven by tensions between the parties, especially cost blowouts incurred by contractor Leightons due to access difficulties.

“They complained about inability to access the station to do the work. The station remained an operating station through the whole project,” said lead partner in the deal Tim Garood.

“Really it involved the resetting of the project parameters and the whole of the project documentation, which is very extensive, was substantially rewritten to reflect the reality of the project and to accommodate the concerns of all the parties,” he said.

This included the Victorian government, Civic Nexus and its institutional backers, as well as the contractor Leighton.

Garood said a measure of the complexity of the undertaking was the fact that the renegotiation took nine months to complete, and the final signing of the documents three hours.

The project has led to Bakers advising the Victorian Government on a few other smaller projects which “represent changes to accommodate the new market in PPPs”, he said.

“The Australian PPP market has now entered a more mature phase, or second wave, where ownership is sought out by institutional investors and risk allocation is adjusted to meet the needs of the current market.”

Garood said there are some lessons to be learnt from the Southern Cross Station PPP.

“In broad measure, [they] relate I think to what risk the private sector is prepared to realistically accept and therefore what the government sector really needs to factor in to make the projects more attractive to the private sector,” he said.

“Vice versa, I think the private sector has learnt also how it should more accurately price the risk.”

Civic Nexus was represented by Blake Dawson Waldron and Leighton Contractors by Malleson Stephen Jaques.

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