Hensel Phelps Provides Update on San Diego Hilton Incident

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. October 14, 2008

MAY 21, 2008. May 19th, shortly after 2:00pm there was a natural gas explosion at our Hilton Hotel project in San Diego. The incident occurred on the fifth floor where gas is fed to the Domestic Water system. At this point the precise cause of the explosion is still under investigation.

First, the thoughts and prayers of the entire construction team and our company are with the injured workers and their families. San Diego Police and Fire Department performed an outstanding job of securing the site and transporting 13 people to the hospital. All but 4 have been released, 3 people are being treated for burns. We will keep you updated on their condition. The injured employees worked for subcontractors on the site.

We have secured the site and suspended work while we assess the damage. Cal OSHA was immediately notified, they have been through the site and are continuing their investigation. San Diego building officials have inspected the site and turned it back over to Hensel Phelps. At this time it looks like the damage, while extensive, was not structural and was confined to a small portion of the building. Engineers are on site today and tomorrow to verify the structure is safe. Once we verify there was no structural damage we will implement a plan to safely remove the debris and repair the building. At this point we are optimistic that this will not affect the opening date this fall. We will share any additional information as it becomes available.

Safety is a key value at Hensel Phelps. We will work diligently with appropriate regulatory agencies to determine the exact cause of the incident. Our focus right now is tending to the needs of those who have been hurt in this incident.