General Electric (NYSE: GE) has terminated a $56 million contract with Norfolk Integrated Engineering (ASX: NFK), according to a Norfolk press release (link opens a PDF) issued today.
The deal was first penned in August 2012, when the two companies agreed to collaborate on a new radio-based railroad signalling system for Fortescue Metal Group's (ASX: FMG) track duplication project in Western Australia.
While a surprise, the termination falls under GE's contract rights to bow out "for convenience." Norfolk and GE will continue to work together to hand over the project, and are currently in negotiations to determine Norfolk's compensation for works completed.
According to the press release, the results "could have a material negative impact" for the year to 31 March 2013. As of today, Norfolk expects a $20 million to $30 million EBIT reported guidance loss for FY 2013 with continuing operations pulling in just over $20 million. The company does not expect the termination to affect its FY 2014 guidance.
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