Leighton Holdings' Middle Eastern joint venture, Al Habtoor Leighton, has settled a long-standing dispute with Qatar-based business conglomerate Al Faisal Holding to recover money owed on a $347 million expansion of the Doha City Centre shopping mall.
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Al Habtoor Leighton reached ''an amicable'' agreement with Sheikh Faisal bin Qassim Al-Thani, chairman and chief executive of Al Faisal, after he cashed $100 million of performance bonds last year held as security for the construction of five hotel towers attached to the mall, according to Leighton.
''The agreement includes the return of all the liquidated bonds which were called during May to July 2013 and agreement on the contract values for the associated completed and ongoing projects,'' Leighton said.
It comes as Leighton's new CEO, Marcelino Fernandez Verdes, tries to resolve the company's outstanding debts after the contractor's board agreed to a $1.2 billion takeover offer by controlling shareholder Hochtief, which is owned by Spain's Grupo ACS.
Mr Fernandez Verdes, who replaced Hamish Tyrwhitt, wants to deal with Leighton's debts as quickly as possible as he prepares a restructure of the contractor's operations.
Leighton is owed more than $5 billion on projects globally.
Al Faisal has already paid 40 per cent of outstanding payments to the joint venture and will pay a further 20 per cent over the next few weeks.
The balance of owed payments will be paid over the next 18 months as remaining projects are handed back to Al Faisal. Leighton, which has $1.4 billion of exposure to the joint venture, did not provide details on how much of the owed payments it would receive from Al Faisal.
But it said the agreement was in line with the joint venture's ''anticipated financial result'' for the Doha City Centre project and significantly reduced the joint venture's risk exposure to Leighton.
Analysts said it was likely Al Habtoor had accepted less than the full amount owed to resolve the dispute. Al Faisal's call on the bonds last year stopped Al Habtoor making repayments on Leighton's outstanding loans. Leighton's exposure to the joint venture included $632 million in loan receivables and $384 million in letters of credit at the end of December.
The carrying value of Leighton's investment in the joint venture, which recorded a profit of just $1 million in 2012, is $345 million.
Al Habtoor Leighton had 73 legal cases running against Al Faisal.
The sheikh challenged the legal action, claiming his company had delayed project delivery dates and that Al Habtoor Leighton had been mismanaged.
Leighton's shares rose 6¢ on Wednesday to $20.06.
