Australian construction firm slams joint venture deal after struggles to collect payments
Stephen Johns, the chairman of Australia’s largest construction firm, Leighton Holdings has said he believes his company should never have agreed to form a joint venture with Dubai’s Al Habtoor Group.
Johns told The Australian Financial Review that Leighton suffered a loss of $152.7m in the six months to the end of December, after the JV struggled to collect paymentsfor projects in the region. Habtoor Leighton said it expects to collect only half of its unpaid legacy receivables over the next two years.
“In hindsight, no, we’re not happy with [Al Habtoor Leighton], we should never have gone into it,” Johns told the AFR.
He added that since the joint venture was formed in 2007, Leighton had written down almost two-thirds of its value.
Johns comments came ahead of Leighton’s annual meeting where the chairman is expected to outline changes to improve the company’s risk management.
The joint venture, which had won a $130.6m contract to build part of the $816.7m Jewel of the Creek marina development on Dubai Creek, is hoping it may also be able to generate more business from infrastructure projects in Abu Dhabi and it is diversifying away from Dubai into other emirates and other countries in the region and North Africa.