* John Holland could fetch $750 mln
* Sale would help Hochtief to take 75 pct ownership
* Leighton wants to streamline business
(Recasts with debt reduction, adds analyst quote, deal context,
By Byron Kaye
SYDNEY, June 12 Leighton Holdings Ltd,
Australia's largest construction firm, said it may sell its John
Holland roads and rail business as Spanish-controlled majority
owner Hochtief AG seeks to cut debt and potentially
finance a bid for full ownership.
Germany-based Hochtief, controlled by Spain's ACS
Actividades de Construccion y Servicios SA, has been
building its stake in Leighton since first buying a majority
holding in 2001. In March, Hochtief offered to up its stake to
75 percent, raising concerns about the effect that would have on
ACS's debt levels.
Selling John Holland, which analysts say could fetch A$800
million ($750 million), as well as the property and services
businesses would cut debt as Hochtief, which currently has 69.62
percent of Leighton, prepares to buy 75 percent and potentially
move to full ownership.
"The key aim I believe is to reduce debt," Morningstar
analyst Ross MacMillan said.
"Leighton has complex debt financing. If that debt can be
reduced substantially that would allow Hochtief to increase its
stake above 75 percent."
Leighton shares were 2 percent higher at A$20.25 after the
announcement, in a weaker overall market.
In a statement to the Australian Securities Exchange on
Thursday, Leighton's new Executive Chairman and Chief Executive
Officer Marcelino Fernandez Verdes said the company would
simplify its operating model to focus on its mining,
construction, public-private partnerships and engineering
It would consider options for its 42-year-old property
business, its services business and John Holland, "including the
potential divestment or introduction of new partners to these
Sale proceeds would be "used to reduce our gearing and
strengthen our balance sheet so as to increase our
competitiveness", added Verdes, who was appointed CEO in March
and executive chairman on Wednesday.
Leighton is in Hochtief's Asia-Pacific division, which saw
pretax profit rise by over a fifth despite a weaker Australian
dollar that cut the value of new orders, work done and sales in
2013 compared with 2012.
ACS's stake in Hochtief recently rose to around 55 percent,
from around 49 percent, when the German builder cancelled 10
percent of its treasury stock.
($1 = 1.0667 Australian Dollars)
(Reporting by Byron Kaye; Editing by Stephen Coates)