Leighton board independence under question

Leighton Holdings chief executive Hamish Tyrwhitt says his management team has the full support of its German controlling shareholder, Hochtief, and sought to allay investor fears that a possible downgrading of its credit rating could cost it dearly.

Mr Tyrwhitt, alongside chief financial officer Peter Gregg, told analysts during a teleconference call on Monday that new chairman Bob Humphris had assured management there would be no changes to the group's strategy that has allowed it to recover steadily in the past few months after a troubled period of key project delays and hefty profit downgrades.

"Certainly issues like this don't help," Mr Tyrwhitt said. "One of the things we're doing is contacting many of our clients to assure them that it's business as usual."

Credit rating agency Standard & Poor's is deciding whether to cut Leighton's credit rating, following the shock resignation of chairman Stephen Johns and directors Ian Macfarlane and Wayne Osborn on Friday.

S&P analyst Craig Parker said the resignations could suggest Leighton no longer operated independently from Hochtief and its Spanish parent Grupo ACS, and should be rated accordingly.

"Three of the five independents felt strongly enough to resign," Mr Parker told BusinessDay. "That raises a question in our mind."

But Mr Gregg denied the potential increase in financing costs would be significant.

"There's a pricing step-up there but it's not severe and it varies depending on the facility," Mr Gregg said.

Along with Mr Humphris, the only other independent director not to resign in protest over perceived board interference from Hochtief is Paula Dwyer.

She was appointed deputy chairman and will also chair a sub-committee tasked with recruiting four new independent directors.

The process will attract much scrutiny, given it was an attempt to fill a previous independent vacancy that led to a breakdown in relations between Mr Johns and Hochtief-appointed director Marcelino Fernandez Verdes.

Mr Humphris, 70, declined requests for interviews on Monday, but in a statement to the stock exchange said the board's "immediate priority" was to find replacements for the departed independents. But there are questions over whether he is merely an interim appointment, and also whether he and other independents will be able to enjoy the same levels of autonomous operation prior to the ACS takeover of Hochtief in 2011.

After falling as much as 10 per cent on Friday, shares in Leighton rebounded by 87¢, or 4.3 per cent, to $21.07 on Monday.

Adele Ferguson, Page 34