Downer EDI informed the Australian Stock Exchange on Thursday that it is set to take a hit of up to $250 million on its Waratah train project, apart from the $190 million provision the company had previously booked in June 2010.

The news immediately showed troubling effects on the company's market values, sending its shares tumbling by as much as 25 percent and wiping out some $380 million from its market worth.

Reports published by Business Day this week had hinted that Downer may experience financial issues following its negotiations with credit agency over a possible ratings downgrade.

That speculation appears to hold some water now as Downer eventually admitted today that delivery of freshly assembled commuter trains for use in Sydney may have to wait until May or June, contradicting its earlier claims in December that a January delivery to RailCorp would be likely realised.

In justifying the sudden change of schedule, Downer said that scores of issues needed to be solved first to ensure that quality and durable trains would eventually be seen running on Sydney's railway network.

The company said that it is presently dealing with glitches on the trains' electronics, which it said has been detected only on Thursday morning. It added that more workers with enough train-assembly experience will be required thus forcing the company to implement production schedule adjustments.

Downer chief executive Grant Fenn gave assurance though that they are working closely "with RailCorp to deliver 78 high-quality, safe and reliable trains for the people of New South Wales."

Fenn admitted that the company is facing challenging issues in meeting the contract but he maintained that "the measures we have outlined today will ensure the program can be delivered in the shortest possible time."

Also, Downer acknowledged that the earlier timetable it laid out for the trains' delivery were grossly unrealistic, otherwise asserting now "the need for more extensive changes to engineering and production processes in order to facilitate the high-volume, assembly-line build that is required for this large and complex project."

To ensure that no further delays would mar the RailCorp project, in which Downer is lead contractor for the Reliance Rail partnership, the company tapped the expertise of Ross Spicer in supervising the project's progress. Spicer used to work as consultant for RailCorp.