the age - letters 01/09/09

No Breach By ConnectEast

MICHAEL West's column (BusinessDay, 29/8) is wrong on many counts. ConnectEast's capital raising to reduce its balance sheet gearing is no different from action taken by many Australian companies. It is incorrect to suggest ConnectEast has been back to the market six times since our float. We raised capital in November 2008 and last month.

West is also wrong to say ConnectEast faces "lawsuits, possible breaches of banking covenants and material disclosure foibles". Claims in connection with the settlement of outstanding contract issues have been disclosed, along with our assessment these will not result in a material liability. We have complied with our continuous disclosure obligations at all times and have not breached our banking covenants.

West relies on calculations by Dr John Goldberg and accepts his misconceived claim "the EastLink peak-hour forecasts are almost twice the level the road can bear". Dr Goldberg's methodology is flawed. He treats EastLink as a single section road when it has 13 tolling sections and 17 interchanges. Its traffic projections reflect a range of trips across the tollway.

The inference that ConnectEast has misled investors by promising "a certain rate of return which the project cannot possibly generate" is offensive.

ConnectEast would have welcomed the opportunity to address these important issues with West had he only asked.

John Gardiner, Managing Director, ConnectEast, Ringwood