Rail company warns city of financial trouble ahead
HONOLULU (HawaiiNewsNow) - The Honolulu Authority for Rapid Transportation (HART) heard a warning today that the company it chose to build the train is headed for financial ruin, but the warning came from the company that has so far been rejected by the city. So will HART listen?
The city has now won two rail bid protests but that doesn't mean the appeals process is over.
In a bit of drama an executive with Sumitomo Corporation, the company that just lost its bid protest with the city, testified before the HART board telling them the company the city did choose Ansaldo Honolulu is leading them toward a financial crisis.
"I think you are sitting before a financial bubble. You have subprime indications, you have subprime tendencies, you have subprime issues that arose," said Gino Antoniello, Sumitomo Corporation Vice President of Transportation Systems & Equipment.
Ansaldo has been restructuring and its parent company Finmeccanica has acknowledged significant financial losses. That prompted Sumitomo to essentially throw Ansaldo under the bus.
"The parent company said you're no longer a core business, the parent said we don't want you, we'll sell you. Why? The parent chose that route because they're not making money. The parent chose that route because they haven't performed well in the past. That's all documented. These are the indications many people ignored in the subprime. There will be a bubble and that is my statement to you," testified Antoniello. "The question is will the city take the risk? And prove me right, or prove yourselves right or prove somebody wrong. It's not rocket science."
"We should look into it and take it to heart per say and do our due diligence and really take a look to make sure Ansaldo is the best one for us," said Damien Kim, Honolulu Authority for Rapid Transportation Board Member. "We shouldn't overlook things like that. The stock market changes every day. Things are happening so we need to stay current with things like that as well. We'll take into consideration what they did say. I believe it is on everybody's mind."
HART's Interim Executive Director Toru Hamayasu did send Ansaldo a letter asking for any changes in its finances. Hamayasu says the true test will be if Ansaldo is able to get hundreds of millions of dollars worth of insurance bond money, which adds up to nearly 64 percent of the project cost. It's a way of ensuring the company can finish the job. If not...
"Then we have to do another round to see what the change means," said Hamayasu.
That could mean going with another company which is why the Sumitomo Corporation also said this...
"Let me apologize today if we do appeal. It is part of the process. The other thing I want to say to you is regardless of the process we will stand by whether it's on the sidelines or an open forum, no difference, we will stand by until you make your final decision," said Antoniello.
"It would be nice to know if things don't turn out the way we want that there's another option," said Hamayasu.
While the rail is still a long way from carrying passengers there's already a lot riding on happens next.
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