MARKETS

Chaos at Leighton as three directors resign

THREE Leighton Holdings directors, including chairman Stephen Johns, have resigned due to a perce...

Marion Lopez
Chaos at Leighton as three directors resign

Leighton said the other two board members to resign were non-executive directors Wayne Osborn and Ian Macfarlane.

The shock resignations are due to the view held by the three directors that German company Hochtief no longer supports an independent board at Leighton.

Hochtief has a 54% stake in Leighton but does not have majority board control.

Leighton’s fears of losing its independence arose when Spanish contractor Actividades de Construccion y Servicios (ACS) signalled its intention to buy Hochtief in 2010.

ACS currently has a little more than 50% of Hochtief.

At the time of the acquisition ACS said it would not threaten Leighton Holdings’ independence.

“We want to work together with Hochtief in the same way that Hochtief does with Leighton to this day … we can also guarantee that in writing in an investor agreement,” ACS chief executive Florentino Perez reportedly told a German newspaper at the time.

In the meantime, Leighton Holdings applied to the Australian Takeovers Panel to retain board independence in the event of an ACS takeover of Hochtief.

"Leighton seeks final orders including that ACS and Hochtief commit to maintaining Leighton's independence from Hochtief and ACS in the event that ACS obtains control of Hochtief," the takeover panel said.

Today’s resignations clearly demonstrate independence issues within Leighton’s boardroom were never fully resolved.

However, Leighton told the market this morning that the governance arrangements between Hochtief and Leighton guaranteed Leighton operated under an independent board and management.

“Leighton believes these governance arrangements, which have been in place for a long period, have contributed substantially to the value created for all of Leighton's 57,000 shareholders,” Leighton group company secretary Richard Willcock said.

“The current arrangements with Hochtief are expected to continue and we believe this is well understood by the market.

“The board will convene at the earliest possible time to elect a new chairman.”

Leighton said it would release a fuller statement in due course.

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