Australian construction giant tells The Big Project that media reports about the end of the five year partnership with Al Habtoor Group are wide of the mark
Leighton Holdings, the Australian partner of Habtoor Leighton Group (HLG) has confirmed the UAE based joint venture, which is currently working on Dubai Pearl among other projects, will not dissolve its partnership with Habtoor Group, despite recent comments from Leighton’s chairman claiming that it should never have got into the partnership.
Stephen Johns was quoted by The Australian Financial Review earlier this week as saying: “In hindsight, no, we’re not happy with [Al Habtoor Leighton], we should never have gone into it.”
Johns, chairman of Australia’s largest construction firm, Leighton Holdings, told the publication that Leighton had suffered losses of $152.7m in the six months to the end of December 2011, after the JV struggled to collect payments for projects in the region.
Habtoor Leighton said it expects to collect only half of its unpaid legacy receivables over the next two years.
A spokesperson from Leighton Holdings has since told The Big Project: “We’re working hard to recover those outstanding monies owed to us on a number of projects. We’ve employed extra resources to build the relationships which are critical in the Middle East.”
“As we get recovery and closure of these old projects then the weight swings towards new Habtoor rather than old legacy Habtoor. So if we’re retiring debt, then the business is cash flow positive and profitable.”
Leighton’s spokesperson has also denied international media reports, published since The Australian Financial Review article, that claim the company is “preparing to shed” HLG.
“Leighton is not ‘preparing to shed’ HLG. We said at yesterday’s AGM that part of our strategy deals with the ongoing business. This is to have a HLG ‘IPO’ ready by 2016. This is about ensuring that the joint venture has the right structure, governance and projects to make it a sustainable business (moving forwards) in the future.”
The Habtoor Leighton Group JV was established in 2007 and recent project wins in the region have included a $169m deal for mine-related infrastructure for the Ma’aden Alcoa Aluminium JV in Saudi Arabia; a $515m contract for the largest integrated hotel complex in the region on the site of Dubai’s Metropolitan and a $290m contract for the construction of the first phase of Doha’s North Gate Mall and office complex. Earlier this year, the company also unveiled a new corporate identity.
“HLG has won a number of new projects which are typical of some of the new work opportunities the Company is pursuing in the region and reflected the HLG’s growth strategy to expand into new geographic markets. Our growth strategy is based on diversifying our workload by both geography and work type with good quality clients who value our services,” the spokesperson said.
Habtoor Leighton Group has not yet released an official statement on Johns’ comments.