GMP Reduction

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GMP Reduction is the reduction to the Guaranteed Maximum Price (GMP) from the Construction, Development or Design agreements, provided by Atcon Construction, Andrew Gamble and Jivko Jivkov. These savings in the amounts they would otherwise have charged for their work are instead treated as Invested Equity belonging to them.

The only reference to GMP Reduction is Amendment 3 of the Concession Agreement from Feb 22/2008, which references a GMP Reduction Agreement (presumably not public) between the DCBC and the above parties. This also uses the term "Incremental Invested Equity", which would imply that the GMP Reduction equity was intended to be built up over time.

The amendment refers to an "$600,000 aggregate decrease" in GMP from the parties. This would presumably be the Gamble-Jivkov portion, since the only info I've seen placed their equity targets at $300,000 each. Atcon's reputed $2.3 million target might have been already handled separately. Alternatively, it might have been $300,000 for Atcon (and $150,000 each for Gamble/Jivkov), representing the difference between a $2.3 million target and the $2 million in equity shares that Atcon was publicly reported to have bought. However, I suspect that "$2 million" might just have been a rounded version of "$2.3 million" (if the latter was Atcon's total commitment). In any case, the whole equity issue is very murky.

It also indicates that should any of the Construction/Development/Design agreements be terminated, the related GMP reduction would no longer be considered Invested Equity. As Atcon is no longer the general contractor, and the GNWT has taken over the project management, it is likely that these agreements have in fact been cancelled. Presumably any amounts foregone for work actually completed will have to have been paid out. The Gamble-Jivkov lawsuit settlement indicated each received back $150,000 as equity compensation[1], but it is unclear if they would have contributed additional "Incremental" had they continued with the project. Atcon's stake (only around $500,000 of which may have been paid up[2]) would be part of whatever settlement the GNWT made or will make with Atcon.

References

  1. MIX 100 story, March 7/2011
  2. http://www.nnsl.com/frames/newspapers/2010-01/jan8_10br.html