UK Power Firm Pulls Plug On Rio Olympics Bid

British temporary power supplier Aggreko (LSE: AGK.L - news) has dealt a blow to the organisers of next year's Rio de Janeiro Olympics by pulling out of a tender for the Games.

The firm has supplied power to nine summer and winter Olympic events since it was formed in 1997.

The temporary power contract is a vital part of Olympic preparations, guaranteeing a stable and secure energy supply for international broadcasters, the opening and closing ceremonies, as well as back-up electricity for the venues.

Shares (Berlin: DI6.BE - news) fell 2%. Aggreko said the decision came after it was told it was not awarded the first tranche of contracts.

The company said in a statement: "Given the preparation required for an event of this scale, we have withdrawn from bidding for the remaining tranche."

Chief executive Chris Weston said: "We have given considerable thought to our decision to withdraw from the bidding process and I would like to thank our team for all their hard work.

"We wish Brazil, the Rio 2016 Committee and the International Olympic Committee the very best for a successful games."

Aggreko is seen as the most experienced bidder for the Olympic deals. It (Other OTC: ITGL - news) has also been involved in six football World Cups.

There is speculation that remaining firms in the running might lack the capacity and experience to meet the needs of the contract and that the winner of the bid will likely have to lease generators from Aggreko.

Its withdrawal will be seen as a worrying sign for organisers, under huge pressure to cut spending as Brazil suffers from its worst recession in 25 years. The government has already warned there is no money to cover any overruns.

The announcement comes after Aggreko warned in August that markets were likely to remain difficult next year, following a profit warning in July.

The firm's power deal for the 2012 London games was worth nearly $60m (£40m) though the value of the Rio contract is expected to be lower as it is smaller in scope.

Stifel analyst Caroline de Soujeole said: "It won't impact earnings expectations but it does support our view that Aggreko has lost some of its sparkle in recent years (Other OTC: UBGXF - news) ."