THE Australian company building the new Wembley stadium is facing losses of more than £20m on the contract.

Multiplex, which is locked in a bitter legal battle with Darlington-based Cleveland Bridge over the project, warned in February that it expected only to break even on the project due to litigation costs.

Multiplex has already had to pay nearly £5m to Cleveland Bridge after mediation between the two companies and the full case is due to be heard at the beginning of next year.

Cleveland Bridge, which erected Wembley's 350-metre arch, said Multiplex still owed it a significant sum of money for the work it completed on the stadium. The company was replaced at Wembley by Dutch group Hollandia.

One of Australia's largest development companies, Multiplex said yesterday margins on the scheme may have deteriorated significantly and that losses could end up being far greater than the £20.8m that its founding family had agreed to cover.

John Roberts, who set up the company in 1962, has agreed to step down as executive chairman while another director has also left the board.

Shares in the Sydney-listed group have been suspended while the company takes a further look at the position, which emerged following an internal review. It expects to provide further information on Monday.

One of the outcomes of the review could be a ''loss position significantly greater than that which would be covered by the Aus $50m Roberts Family indemnity", a statement said yesterday.

The stadium project - worth about £500.3m to Multiplex - is due to be completed in time for next season's FA Cup Final.

A spokesman for Multiplex said: "We are still very confident that we will meet our contractual obligations."

In February, the Roberts family offered to cover any losses up to Aus $50m, a move the founders said showed their confidence in the Wembley project and "in management's ability to recover claims".

The family, which owns 26 per cent of the company, said at the time that they did not believe the project would lose money.

Mr Roberts, who is one of Australia's richest men, will remain at the company as a director. Multiplex said it had shortlisted candidates to find a board member with property experience in the UK.

A Cleveland Bridge spokeswoman said last night: "Cleveland Bridge remains in dispute with Multiplex and is expecting its litigation to commence in early 2006.

"Following the successes that the company experienced in the arbitration process during 2004, Cleveland Bridge continues to be confident of its case and believes that it will secure the losses and damages detailed in its claim at the end of the legal proceedings.

"The litigation is between the two corporations and the management changes at Multiplex do not in any way affect this process."

Last week, Multiplex reported profits of £10m after selling its 12.5 per cent stake in the White City shopping centre development, in London. The company's portfolio includes Sydney's Telstra Stadium and Federation Square, in Melbourne.