Leighton Holdings shares have fallen sharply as investors worry about the construction giant’s future profits, lower dividends and more than $5 billion in unpaid bills.
Retail and institutional investors are offloading the stock amid concerns about being left as a minority shareholder in the construction group under parent company Hochtief.
Hochtief has flagged widespread job cuts to Leighton Holdings’ 56,000-strong global workforce as shareholders consider a $1.2 billion bid to increase its stake in the company.
Germany-based and Spanish-owned construction company Hochtief is undertaking a review of Leighton and considering whether to merge or abandon its John Holland and Thiess businesses.
The move comes after Hochtief secured support from Leighton’s board to take a greater stake in the company.
At 1445 AEDT Leighton Holdings shares were $1.07, or 5.0 per cent, lower at $20.30.
At the close, its shares had recovered somewhat to finish 72 cents or 3.4 per cent lower at $20.65.
Analysts say uncertainty around the future direction of Leighton had led to the sell off on Monday.
“There’s increased uncertainty, especially around the key issue of the $US5.1 billion in unpaid bills,” Morningstar analyst Ross MacMillan said.
Changes to the scope of works on the Gorgon and Iraq projects had worried investors and left doubts about Hochtief reaffirming Leighton’s previously stated profit guidance and dividend policy, he said.
Last week, Leighton axed chief executive Hamish Tyrwhitt and chief financial officer Peter Gregg, in line with Hochtief’s request to change Leighton’s management and board.
Mr Tyrwhitt has been succeeded by Hochtief chief executive Marcelino Fernandez Verdes as the company undertakes a review.
“As a result of the general review by Leighton, already under way, some employees may become redundant,” Hochtief said in a statement lodged on Friday and confirmed by Leighton to the market on Monday.
Hochtief on Thursday lifted its offer for three out every eight Leighton shares to $22.50 per share, from its March 10 bid of $22.15 per share.
The general review of Leighton, looking at making Leighton’s businesses more efficient, is expected to be completed by the end of 2014.
Hochtief said the outcome of the review may result in changes to the structure of the operating businesses, including the number and functions of employees and the sale of assets.
Hochtief will lift its stake in Leighton from 58.77 per cent to a maximum of 73.82 per cent, for a total price of about $1.2 billion, subject to Foreign Investment Review Board (FIRB) approval.