The sale comes after Leighton’s decision last year to shave assets considered non-vital to its core business in a bid to consolidate the company. This followed a series of write downs at major projects, including the Victorian Desalination Plant and Brisbane’s AirportLink M7.
The agreement should see Teachers’ own about 70% of the three assets combined (valued at $885M), leaving Leighton with about 30% ownership and equal board representation on the joint venture.
Both parties committed to the joint venture vehicle for a minimum three years.
Leighton chief executive officer Hamish Tyrwhitt said he was pleased with the way the sale was progressing and the collaborative approach developed with Teachers’.
“The sale price represents a compelling value creating proposition for Leighton Holdings’
Shareholders,” Tyrwhitt said.
“It has the potential to create further value given that we will retain approximately 30% of the businesses and thereby access to the upside value created by the new ownership structure with Teachers’
“We have formed a very positive relationship during the sale process that augurs well for the future development of these telecommunications businesses. We look forward to continuing to work closely with Teachers’.”
Tyrwhitt added Teachers’ should bring enhanced financial strength and access to capital to the joint venture, thereby positioning it for growth potential.
Leighton’s telco businesses will remain Australian headquartered and managed with the existing management team remaining largely in place.
Leighton will continue to support the businesses through the provision of operations and maintenance services through its Visionstream subsidiary.
The sale agreement stipulates Leighton should have customary board and shareholder voting rights in relation to material joint venture decisions, although the company agreed to a restraint to support the activities of the businesses.
The transaction is expected to close in mid-2013 and Leighton will keep the market updated as the sale progresses.