Downer EDI has rejected all claims that it is fidgeting with its operational funds to lift its end-of-year accounts.

Downer asserts it has maintained "ample liquidity" with about $600 million cash in hand and existing debt facilities.

The media claims hammer at the infrastructure and engineering firm as it attempts to reassure its investors that the company will not require equity inflation several weeks after it posted a blowout of costs on rail deal with the government of New South Wales.

Media reports, quoting a leaked email, said Works Australia, a primary division of Downer EDI that focuses on construction and maintenance of roads and railways mainly for the public sector, was postponing a payment to creditors worth $35 million after its end-of-year accounts close this day.

Downer EDI made two statements yesterday to the Australian Securities Exchange just about an hour in between to clarify the controversial email, which was sent around a couple of weeks ago from Works Australia's head of finance.

In their number two statement, Downer EDI announced: "The $35m referenced in the subject email relates to both identified collectable debtors and a (separate) proposal to manage creditor payments.

"The relevant debtors are expected to be received before year-end and Works Australia expects to pay all creditors as per agreed creditor terms."

One of the senior traders of a Sydney worldwide investment bank said Downer's statements "did seem a touch dubious".

The trader stated there were concerns on credibility, underlined by the $190 million proviso on projected cost overruns revealed on the 1st of June, which indicated that profits from its rail project at Waratah was no longer plausible.

In a sophisticated structure, Downer EDI owns 49 per cent of the Reliance Rail group's shares, which is making 78 new trains for the Sydney suburbs in public-private joint venture with the government of NSW.

Downer's distributions with the rolling stock at Waratah, which are being worked on in China under sob-contract, brings back memories of the firm's hassles on the last batch of NSW suburban trains, the Millennium trains, which were issued several years behind schedule and then had to stop operations during rush hours due to technical failings.

While the Millennium was a new model, the Waratah was believed to be based mainly on its predecessor's design, however this seems to have changed after about 19,000 or so design alterations.

Chris Savage of Goldman Sachs JBWere said to investors yesterday that he concurs with other analysts who claim that Downer EDI is facing some downside risks, including the possibility for more overruns on cost about the rail contract and its potential need to lift further equity.

Standing by his hold recommendation on the engineering firm, Mr. Savage lowered his target price to $5, at a rate of 20 per cent.