Global construction: Three legs good? FLORENTINO PÉREZ, chairman of Real Madrid, seems relaxed about the high levels of debt at his football club. But in a current spat with fans they disagree about exactly how much it owes for buying expensive players such as Gareth Bale: he says the club owes €90m ($122m), they say it is a whopping €541m. Three years ago, ACS, a big Spanish construction group of which Mr Pérez is also chairman, put a strain on its balance-sheet to buy Hochtief, a bigger German rival. For a building firm, the collapse of property prices meant almost anywhere looked better than Spain. Taking over Hochtief was cheap - a bid for the whole company was not required because of a quirk in German securities law - and a stake in Leighton, an Australian construction firm, came as part of the package. Leighton resented this raid by a cash-strapped Spanish firm. But the three companies were lumbered with each other. Things have not gone entirely to plan for ACS. Leighton, with operations across Asia and the Middle East, was supposed to offset the European recession that thumped ACS and Hochtief. But the company has issued a series of profit warnings as a result of cost overruns on projects in Australia, because of bad weather and poor risk management, and cashflow problems with a joint-venture partner in the Middle East. ACS reported a €2.5 billion pre-tax loss in 2012, but not just because of Leighton. ACS had bought into a couple of Spanish utilities that also suffered from the effects of Spain's economic crash and complying with costly government regulations. It sold one, but was still extricating itself from Iberdrola, a power firm, at a steep loss. Now the outlook is slightly better, apart from press reports of a bribery probe, which had been initiated by Leighton in 2011. The firm is co-operating with an investigation. Leighton's costs are being better managed, although the construction industry is going through a tough time in the developed world, and is slowing even in Asia. The stake in Iberdrola has been whittled down to 6%. Leighton made a pre-tax profit of A$554m ($560m) in the first half of the year, having sorted out its cost overruns, and contributed most of the profits for the entire group. Hochtief was just in the black, while ACS's other companies made a net loss of €95m. The group's debt was cut from €9 billion to €5 billion during 2012. Hochtief has shed its divisions which operate airports and other facilities, for about €1.3 billion, and has settled a potentially damaging spat at home about the cost of a concert hall it is building for the city of Hamburg. Both Hochtief and Leighton are on their third chief executive since the takeover. But Marcelino Fernández Verdes, a former ACS man who is now Hochtief's boss and sits on Leighton's board, seems to have won the respect of the Germans and Australians with his firm action on divestments and cost-cutting. It is a tricky balancing-act: although Hochtief and Leighton are consolidated on ACS's balance-sheet they are separately listed and supposedly independent companies. Mr Verdes is meant to represent all shareholders, not just ACS. But this may not continue to be the case. Hochtief has been buying back some of its own shares and also some of Leighton's. Both these moves strengthen the voting power of ACS. It is still a long way from the 75% stake which would give it full control of Hochtief. It has always denied that this is its plan, protesting that construction firms need a local identity. But "never say never," confides an ACS source.