The chairman of Leighton Holdings, Australia's biggest builder, believes the company should never have gone into a joint venture with Al Habtoor Group in Dubai, having faced severe challenges in the region.
The Habtoor Leighton Group venture was established in 2007, before the global financial crisis took its toll on the UAE's property sector.
"With hindsight, no, we're not happy with [the joint venture]," Stephen Johns, the chairman of Leighton Holdings told The Australian Financial Review. "We should never have gone into it."
Leighton has written down the value of the joint venture sharply. Habtoor Leighton Group, which is based in the UAE, has struggled to collect payments, which resulted in Leighton suffering an A$153.9 million (Dh556.7m) loss in the Middle East and Africa in the six months to the end of December.
"Are we happy where it is post-GFC [global financial crisis] and what's happening in Dubai? No. Are we going to work our way out of it? Certainly we'll give it a very good shot … but it's not going to happen overnight," Mr Johns told the Australian publication.
Habtoor Leighton and Al Habtoor Group declined to comment on the matter. Habtoor Leighton had also requested Dh500 million (US$136.1m) of additional funding, Leighton said in February. It is also expecting to collect only half of its unpaid legacy receivables over the next two years.
"This is what keeps me awake," Hamish Tyrwhitt, the chief executive of Leighton Holdings, said at the time. "Not all of it is in our control." Still, Habtoor Leighton later that month announced it had won a Dh480m deal to build part of the Dh3 billion Jewel of the Creek marina development on Dubai Creek. Habtoor Leighton is hoping it may also be able to generate more business from infrastructure projects in Abu Dhabi and it is diversifying away from Dubai into other emirates, other countries in the region and North Africa.
It is also increasingly focusing on a broader base of projects including civil, rail, water, oil and gas, and services, rather than simply building and property development.
In February, Leighton also revealed it was facing a possible breach of its ethics code surrounding payments connected to work at a project related to oil exports in Iraq.
The possible ethics breach was related to Leighton's subsidiary company, Leighton Offshore, "in connection with work to expand offshore loading facilities for Iraq's crude oil exports", the company said.
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