Shares in Hill International (NYSE:HIL) jumped 59% on Thursday following the company's announcement that it has received a contract from TRAC Development Group, a South Korean real estate developer, to provide project management and construction management services in connection with a major housing development in Iraq.
In addition, Hill's majority-owned subsidiary HillStone International, LLC has received a contract to supply building structural systems to TRAC for the development.
The total development includes the construction of 500,000 housing units plus related infrastructure which was granted to TRAC by the National Investment Commission of Iraq. The total development is estimated to cost approximately $35 billion. The Hill and HillStone contracts are each for the first phase of the development only, which includes construction of the first 100,000 housing units plus related infrastructure.
The contracts, each for a period of three years, have an estimated value to Hill of approximately $200 million and to HillStone of approximately $1.3 billion. These two contracts nearly triple Hill's backlog, from less than $800 million to approximately $2.3 billion.
While the contracts with Hill and HillStone are contingent upon TRAC successfully obtaining financing and final governmental approvals for the development, work is expected to begin under these contracts in the fourth quarter of 2011 and be completed by the end of 2014.
Other companies expected to be involved in the development include South Korea's Hyundai Development Co. as general contractor and Texas-based Nucor Steel and Illinois-based Louvres LED International as suppliers.
"TRAC Development Group looks forward to working with Hill and HillStone in Iraq," said Chong Min Mun, TRAC's Chairman. "With extensive experience in Iraq, Hill and HillStone will provide construction technology and cost-efficient methodology to be implemented in the project. Inviting Hyundai Development Co. to join the partnership of TRAC, Hill and HillStone will bring world-class construction technologies and expertise into the region to help ensure we are able to meet project budgets and timetables," Mun added.
"We are excited by this opportunity to support the construction of homes in Iraq," said Irvin E. Richter, Hill's Chairman and Chief Executive Officer. "Hill and HillStone offer a unique combination of services and products ideal for this housing development and we look forward to helping make this ambitious effort a success for our client and for the people of Iraq," Richter added.
HillStone International is a strategic technologies distribution and construction project development company that utilizes low-cost yet high-durability housing technologies domestically and in regions of the world where housing solutions are a high priority of various governmental and private interests. HillStone is owned 51% by Hill International.
Hill International, with 3,000 employees in 100 offices worldwide, provides program management, project management, construction management and construction claims and consulting services. Engineering News-Record magazine recently ranked Hill as the 8th largest construction management firm in the United States.
(Source: Yahoo Finance, Hill International)