14/08/2009 - 15:24

Leighton, Macmahon in partnership talks

14/08/2009 - 15:24

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Leighton Holdings has demanded that a standstill agreement regarding its shareholding in Macmahon Holdings be scrapped should a partnerhship arrangement continue beyond this year's deadline.

Leighton, Macmahon in partnership talks

Leighton Holdings has demanded that a standstill agreement regarding its shareholding in Macmahon Holdings be scrapped should a partnerhship arrangement continue beyond this year's deadline.

The partnership memorandum of understanding, entered into in November 2 2007, allows for both entities to work together on selected construction projects.

The agreement is due to be automatically extended by two years on November 2 2009 unless either party determines otherwise.

The MoU also includes a standstill agreement that requires Leighton to get Macmahon's written consent if it wants to exceed its shareholding to more than 19.9 per cent.

Currently Leighton holds a 19 per cent interest in Macmahon.

Both companies are currently in talks over the MoU however Leighton has informed Macmahon that any extenstion to the agreement must exclude the standstill agreement.

Macmahon did not respond directly to this demand but said that the opportunity to work with Leighton on large projects remains an attractive and important part of its strategy.

The announcement follows the release today of Leighton's results for the 2009 financial year with its net profit falling 28 per cent on the previous year to $440 million.

Leighton said the fall was on the back of a reduced contribution from property development and impairments on the company's investments.

Chief executive Wal King pointed to federal government infrastructure spending, work on the planned national broadband network and growing demand for iron ore and coal as drivers of revenue in the future.

"For the 2010 financial year, the Group is confident that revenue will exceed $19 billion and expects a net profit after tax of around $600 million, subject to any further investment impairments," he said.

"The result represents a similar level of operating performance to the last year and provides a good base for the group to resume profit and revenue growth in 2011 and beyond."

Leighton declared a fully franked final dividend of 55 cents, down from 85 cents in the prior year.

Mr King said work in hand remained close to record levels at $37 billion at June 30, up from $30.3 billion at the corresponding point last year.

In May, Leighton forecast full year profit of $430 million.

Net profit for 2007/08 was $607.9 million.

Revenue for 2008/09 was $18.3 billion, up 26 per cent from $14.5 billion in the previous year.

Infrastructure contributed $10.4 billion in revenue, resources $5 billion and building and property $2.9 billion.

The impairments came on Leighton's investments in toll road projects in Brisbane and Melbourne.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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