What We Learned From the Ansaldo Teleconference
It’s been a rough stretch for Ansaldo, but the Italian transit company passed a key financial test Thursday. Honolulu Authority for Rapid Transportation Finance Committee Chair Don Horner peppered Ansaldo officials with questions and then gave the company his stamp of approval.
Horner, who as head of First Hawaiian Bank is no financial novice, said answers from Ansaldo Honolulu Joint Venture partners Ansaldo STS and AnsaldoBreda as well as Finmeccanica, the parent company, left him pleased, comforted and impressed. He had asked about the companies’ books — everything from profits to liquidity to net worth.
Horner’s comments came at the tail end of and then immediately after a two-hour committee meeting held Thursday on the 30th floor of his bank. The venue — not typical for public government meetings — was picked because First Hawaiian has teleconference capabilities that allowed audio and video connection with a dozen senior officials 12 time zones ahead in Genova and Rome, Italy.
(For a blow-by-blow account of the meeting, read today’s Inside Honolulu Live Blog.)
“As you saw, the primary contractor for the companies, the financial situation was strong when the bid contract was awarded and has gotten stronger,” Horner told Civil Beat after the meeting. “The net capital position, for example, is up over 50 percent. And that 50 percent I was very pleased to see is a result of what’s called ‘organic earnings,’ meaning the company has been very profitable over the past two years since the contract’s been awarded, and that’s very impressive given the economic world situation.”
The 50 percent increase in the net worth of Ansaldo STS — the bigger partner in the local joint venture — came not in the six months since the contract was awarded in March 2011, but in the years since the city first evaluated Ansaldo’s financial position during the first phase of the procurement process. (“Request For Proposals Part 1” resulted in the determination that Ansaldo, Sumitomo and Bombardier were all qualified to offer a bid.)
Horner explained his understanding of his role in the process.
“The job of the HART committee is oversight. It’s the city’s responsibility through the HART administration to do the procurement,” he said. “Our job is to ensure that the process is sound, and one of the material issues from the contract is to determine whether there’s any substantial financial change.”
On top of that, Horner said he asked for the meeting so he could better understand Ansaldo’s ownership structure, philosophies and culture in advance of starting a decades-long working relationship with them. The meeting came after weeks of negative news reports about the companies’ capabilities, both financial and operational.
Horner said he was “pleased” that the company was willing to answer all his questions on short notice.
“Please understand, in their defense, we provided these questions two days ago. So for them to assemble that amount of information in such a short time is impressive and it shows I think the commitment,” Horner said. “What we were most interested in (was) to ensure that this is a priority, and I think we have stronger comfort today it is a priority.
“The information provided was thorough, and there’s still some information we’re still yet to receive. We’re looking forward to that. We expect to get that in the next few weeks. And we’ll move forward with due diligence.”
