S&P puts Leighton on watch

Standard & Poor's said it placed the BBB-/A-3 ratings on Leighton Holdings Ltd. on CreditWatch with negative implications.

The negative watch placement follows news that Leighton's chairman and two non-executive directors tendered their resignations from the board.

According to a statement, they resigned following what was perceived to be a breakdown in relations with the major shareholder, Hocthief AG, S&P said, and a view that Hochtief no longer supports an independent board at Leighton.

Under the current governance arrangement between Leighton and Hochtief, Leighton operates under an independent board and management.

"We believe that the governance arrangements put in place by Leighton's parent Hochtief and endorsed by ultimate controlling shareholder, Spanish firm Actividades de Construccion y Servicios SA, have previously justified some limited separation of the credit quality between Leighton and Hochtief/Grupo ACS," said Craig Parker, an S&P analyst.

"However, with the resignation of the directors, the credit quality of Leighton could be affected by the parent's weaker credit profile," Parker said.

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