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Challenger Acquisitions confident New York Wheel will be finished despite dispute

Reports from New York said the project is set for major delays after Mammoet-Starneth, the design/build contractor, downed tools in May
picture of observation wheel
New York Wheel has been hit by building problems

Challenger Acquisitions Limited (LON:CHAL) has played down reports that the New York Wheel project could be abandoned after a key contractor was fired last week.

Reports from New York said the project is set for major delays after Mammoet-Starneth, the design/build contractor, downed tools in May claiming developer NY Wheel hadn’t paid it.

NY Wheel subsequently took legal action against the contractor for more than US$30mln in damages and lost profits and has since terminated Mammoet-Starneth’s contract.

A replacement design and build contactor has yet to be found and NY Wheel has indicated more funding and legal action will likely be needed to get the project finished.

Challenger has a US$3mln equity stake in the NY Wheel and chief executive Mark Gustafson said he was confident it would be completed despite the recent problems.

So far, US$400mln has been spent out of an estimated cost of US$593mln. Of that, Mammoet-Starneth’s contact was said to be worth US$140mln.

Gustafson visited the site recently and confirmed part of the garage is now operating and the foundations and structure of the terminal building are largely complete.

The manufacture of the four spindle legs is complete and they are ready to be erected, while other manufactured components are in the final stages.

The Staten Island-based giant observation wheel will be larger than the London Eye at 192 metres high and boast views across New York harbour.

Observation wheel specialist Starneth was the company behind the London Eye and until January was part-owned by Challenger.

"Based on my tour of the NYW Project site last week, the parking garage is fully functional and great progress is being made on the terminal building,” Gustafson added. 

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