There will also be a $500 million share buyback, a writedown of goodwill attached to the US and UK construction businesses, which arose because of the Bovis acquisition in 1999, and impairments of certain overseas development projects.
Tanarra said it will keep a close eye on the appointment of a new external chairman, with current chairman Michael Ullmer retiring in November, as well as the broader board renewal process and evidence of cultural change within Lendlease.
In its investor update strategy announced on Monday, Lombardo said he has retained the investments platform in international markets “for several compelling reasons”.
“Through the decisive actions announced today, a new Lendlease is emerging – one that is firmly anchored in the very best of our proud legacy, but less complex, more focused and fit for purpose,” Lombardo said.
“Importantly, we do not launch this strategy from a standing start. Significant work has already been undertaken, and we anticipate making further positive announcements in the near term on our progress.”
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Investor reaction to the restructure was positive with Lendlease’s shares jumping almost 10 per cent. They closed the session at $6.36.
Ian Chitterer, vice president and senior credit officer at Moody’s Ratings, said Lendlease’s further asset sales, cost reductions and the exiting of underperforming businesses, combined with intentions to reduce debt and targeted gearing levels, were credit-positive actions.
“However, Lendlease’s credit quality over the next 12-18 months will still be heavily dependent on improving earnings, receiving proceeds from already announced transactions, and reducing debt levels,” he said.
Lombardo and the board, including retiring chairman Michael Ullmer, said the company was committed to delivering on the changes outlined on Monday.
“The optimum path we have chosen is built upon the creation of lasting economic value.
“We will not walk away from commitments to our valued customers, and we will treat our people around the world with the care and respect they deserve as our business changes,” Lombardo said.
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