NCC sues National Road Administration regarding Southern Link project

11/22/2002 3:47 AM EST

NCC today instigated legal proceedings at Stockholm District Court
against the Swedish National Road Administration's Stockholm Region.
According to NCC, the Road Administration should pay a further SEK 643
million for the tunneling work NCC performed as part of the Southern
Link highway project in Stockholm. Value added tax accounts for SEK 242
million of the total amount claimed.

NCC was commissioned by the National Road Administration's Stockholm
Region in 1998 to perform civil-engineering work as part of, or for the
expansion of, the Southern Link. The original order was worth
approximately SEK 680 million, plus add-on orders worth about SEK 170
million that were subsequently received from the Administration. The
assignment involved tunnel driving in rock, as well as concreting and
landscaping work. The tunneling aspects of the assignment included the
blasting and sealing of bedrock tunnels, plus rock-reinforcement work.
The concreting assignment included forming underground structures for
use in such applications as bridges. The landscaping work included
excavation for pipelines, pipelaying and the construction of road lanes.
A total of 350 people were employed in the project.

NCC completed its assignment this year. Final inspections of NCC's work
were performed on April 12 and July 4, with very good results.

The current dispute applies to a disagreement regarding such aspects as
sealing methods (shotcreting). The Southern Link assignment was a
general contract under which NCC carried out the technical solutions
decided by the National Road Administration, with the Administration
controlling the project. As early as after two months of work, NCC
informed the Administration that the sealing methods selected by the
Administration were resulting in serious delays to the project. During
the years that NCC was involved in this project, the company sent a
large number of messages to the Administration about the risk of delays
due to the incorrect choice of sealing method. The consequent
approximately nine-month delay adversely affected the concreting and
landscaping assignments, resulting in a substantial increase in NCC's
costs. Following final inspection of the project, the Administration
also refrained from paying the value added tax that had accrued on
previous payments made on account, despite the fact that NCC is legally
obliged to submit a report of this tax to the state following final
inspection. The Road Administration argues that it has counterclaims
against NCC in the form of, for example, penalties for delays.

In its annual accounts for 2001, NCC wrote down the book value of the
Southern Link project. NCC's current assessment is that this write-down
will prove sufficient.

"Naturally, it is unfortunate that a project that has been so successful
in almost all respects has to end up with such an extraordinary measure
as a lawsuit. However, we believe that the grounds for our case are very
strong," says Göran Svensson, Regional Manager at NCC Construction
Sweden.

For further information, please contact:
Göran Svensson, Regional Manager NCC Construction Sweden
Tel +468 585 52449 or +46 70 621 0398
Gisela Lindstrand, Press Relation Manager NCC AB
Tel +46 8 585 52346 or +46 70 392 9500

All of NCC's press releases are available on www.ncc.info

NCC is one of the leading construction and property development
companies in the Nordic region. NCC had in 2001 sales of SEK 46 billion,
with 25,000 employees.