Macmahon faces legal challenge to Leighton sale
MACMAHON Holdings shares are under pressure as the mining services company faces a legal challenge over the sale of its construction business to Leighton Holdings.
Indian-based firm Sembawang Australia - a subsidiary of engineering and construction group Punj Lloyd - has instructed its lawyers to file a suit against Macmahon after being denied access to conduct due diligence on the Australian company.
Last week it emerged Sembawang Australia had made an offer to buy Macmahon's construction operations for $25 million, but Macmahon has said it cannot provide Sembawang due diligence access without the permission of Leighton.
Shares in Macmahon Holdings on Tuesday fell 2.7 per cent to 29¢.
Leighton and Macmahon signed off on an asset purchase agreement in December, as Macmahon looks to divest its construction business and become a dedicated full-service mining contractor.
Sembawang chief executive Richard Grosvenor said his company approached Macmahon on November 26 about joint ventures and the potential purchase of its construction business.
But Macmahon has denied this occurred, saying the only offer it had received from Sembawang was its unsolicited, non-binding proposal received on January 3.
"At the time of this announcement, Macmahon has not received any formal notice of legal proceedings having been initiated against it by Sembawang," Macmahon said in a statement.
MacMahon is continuing preparations for an extraordinary general meeting in February, where shareholders will vote on a Leighton deal.
Macmahon has previously said it expects to make just $2 million on the sale to Leighton Holdings due to $12 million in redundancy costs also linked to the sale.
Macmahon warned investors in September that its annual profit would be about half the $56.1 million reported in financial 2012.