Fletcher Building extends trading halt

Monday, 12 February 2018

Fletcher Building has extended the halt on trading of its shares here and across the Tasman as it continues to review mounting losses on key construction projects.

The building giant – which on Thursday requested a halt on trading of its shares on the New Zealand and Australia markets – extended the halt on Monday morning before the NZX opened for trading.

Fletcher Building suffered an annus horribilis in 2017, and 2018 is looking like it will be testing for the company as well.

In a statement to NZX, the company said it was not yet in a position to make any announcement on its Building and Interiors (B&I) unit. News is expected by Wednesday.

A KPMG review in October forecasted a $160 million loss, after major cost blowouts in the previous financial year on two key projects, SkyCity's New Zealand International Convention Centre (ICC), and the Christchurch justice and emergency services precinct.

Fletcher Building told shareholders on Thursday morning that although the review was ongoing, the losses were going to be larger than previously flagged.

Fletcher Building chairman Sir Ralph Norris at the 2017 AGM.

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This time last year, Fletcher Buildings' share price was over $10.

It was just $7.70 before the trading halt was called. Monday trading on NZX begins at 10am.

Analysts and investors have voiced frustration over Fletcher Building's failure to put put a final figure on losses.

The postponement of yet another announcement of further 'material' losses has only increased discontent, and fuelled rumours of asset sales, or even Fletcher Building being sold to an offshore buyer.

Brad Gordon from Hobson Wealth said Fletcher Building had been dropped from its model client portfolio six months ago.

He said analysts' focus on Fletcher was on its balance sheet.

Fletchers were having to talk to its lenders, he said, as a result of its increasing losses having breached the covenants on its 'one or more' of the Group's financing arrangements

'It's all a wee bit speculative in terms of what it all means,' said Gordon.

Options for recapitalising Fletchers' balance sheet included asset sales, suspending dividends, or raising equity.

But, he said, an equity-raising would be 'interesting' for a company where there were questions over poor management.

The continued uncertainty around losses was disappointing for a company of Fletcher's size, he said.

Matthew Henry from Forsyth Barr said Fletchers had a 'reasonably large debt book', and was engaging with debt holders.

'We don't have any insight into what the contractual nature of these debt arrangements are.'