Bloomberg reports that,
Aug. 14 (Bloomberg) — Leighton Holdings Ltd., Australia’s largest engineering and construction company, plans to raise A$700 million ($609 million) selling shares to expand contract mining in India, Indonesia and Australia.
Leighton, which gets about a quarter of its sales operating mines for companies such as BHP Billiton Ltd., will sell stock to shareholders at A$35.35 apiece, 17 percent less than its close yesterday, the Sydney-based company said in a statement.
Chief Executive Officer Wal King, 64, forecast profit will rise at least 15 percent this year as a resources boom continues into the next decade. Demand for coal and iron ore sent prices to records this year, encouraging investment in new mines in Asia.
“The upside is very strong indeed,” said Peter Russell, head of research at brokerage Intersuisse Ltd. who rates the stock a “buy”. “Demand for commodities is not suddenly going to decrease.”
Leighton, halted from trading pending the sale, fell 5.3 percent to A$42.36 yesterday. The stock has fallen 31 percent this year compared with a 21 percent drop in the benchmark index.
Leighton said it will use the money to invest in plant and equipment in Indonesia, Australia and India. The share sale will be the sixth-largest in Australia this year, according to data compiled by Bloomberg.
Indonesia is the second biggest coal exporter after Australia. India is the No. 3 iron ore exporter behind Brazil and Australia.
“Strong demand for global commodities, particularly iron ore and coal, continues to support contract mining activity and resources-related opportunities for the group,” the company said today in the statement to the exchange.
Mining and resources generated 25 percent of Leighton’s sales in the year ended June 30, behind engineering and infrastructure’s 42 percent share.
Demand for infrastructure projects in Australia helped underpin a 35 percent gain in 2008 full-year net income to a record A$607.8 million, Leighton said today in a separate statement. The result compared with the A$613.4 million median estimate of five analysts surveyed by Bloomberg News before today.
Sales rose 22 percent to A$14.5 billion in 2008, it said. Sales in 2009 are expected to rise 15 percent and more than 10 percent the following year, Leighton said today.
The share sale is being managed by ABN Amro Holding NV and Macquarie Group Ltd. Funds raised from the share sale will also be used to buy back debt, Leighton said.
“Now is a good time to raise equities rather than debt,” Intersuisse’s Russell said.
Leighton’s work in hand was A$30.3 billion as at June 30, compared with A$21.1 billion a year earlier, the company said.
The company, seeking to expand into Mongolia and Siberia, has proposed establishing a joint venture with Oleg Deripaska, Russia’s richest man, through his Basic Element company, Leighton’s King said today on a conference call with reporters.
“Our proposed activities with Basic Element falls into two categories of activities,” King said. “Mining activities in particular in Mongolia and eastern Siberia and activities outside those regions.”