FBU - Fletcher Building

[Filthy]

Apparently it was/is a common practice to under bid to win the bid then look to renegotiate terms and penalties later relying on the pally pally approach.

yes. it wasn’t long ago that construction & fitout margins used to be a ‘healthy’ 6-10% depending on project value

now, common industry practice is to ‘go in cheap’ off the plans at say a 1-2% margin, then hope like d*ck that the Client changes their mind as they progress through the build and ping them 20-30% on any of the variations to make-up your lost margin

if the Client makes little or no changes, then you end up with ‘a lot of turnover’ for ‘not a lot of reward’ and you only need one subbie to stuff-up, something not to be delivered to site on-time or your PM to make a wrong calculation and then your suddenly working the job at a loss

consultants bringing out damage-lead contracts (which started to become really popular 10 years ago) that screw the builder over if they do not meet the construction program have not helped the industry at all

very sad to see what was once a very proud construction company in such a sorry state

until the industry changes the way it operates, there is always going to be that added risk to the builder

there is certainly some underlying value to be unlocked at Fletchers, but there is still perhaps a lot of pain to go through to get it…..

I hope things improve for holders & glad it did not hit my target price of 6 bucks back in Nov!





filthy

[macduffy]

I'll have a go: $6.10

Depends what the announcement will say. Any mention of separation and listing of the various business units may encourage interest in the stock.

[Beagle]

[QUOTE]

I reckon lower. It was around 670 after the second downgrade. Logically it would fall below that. This time there are uncertainties as to, say, fire sales and/or capital raisings to mollify the bankers. To top all the self-inflicted problems facing FBU there is now weak general market sentiment.

So, somewhere in the 500s, ..... I'll go for 559. But I wouldn't touch them at 459.[/QUOTE]

Agreed...I'm getting that feeling we need a poll for this one...could be a bit of fun

[minimoke]

Depends what the announcement will say. Any mention of separation and listing of the various business units may encourage interest in the stock.

I think such an announcement would be premature. Though inevitable

[Filthy]

I'll have a go: $6.10

I am picking high-fives (no pun intended)....

glad it did not hit my target price of 6 bucks back in Nov!

new target price significantly reduced now and plenty of other bargains around that would take priority anyway!




filthy

[peat]

Not much of a yield on the listed Fletcher Notes - about 4.30%

Safe as houses

I took a look at those yesterday, I couldnt see anything indicating a sell off (yields rising)

[Beagle]

It would appear that FBU notes are also on a trading halt.

[bullfrog]

Anybody following the collapse of Carillion, a 2bn company that issued a profit warning in July, highlighted contracts were losing money, now in liquidation. Not saying that FBU will end up the same, but I think Carillion got too big to manage, too many disparate elements that a centralised mnagement structure could not control. If, and it's a big if, that's what happened, certain similarities with FBU?


https://www.stuff.co.nz/business/wor...to-liquidation

[Marilyn Munroe]

I have a few carats worth on March 2015 capital notes and have received an election notice giving me the option to roll over or convert.

Fletcher's have have chosen to cash out those who elect to convert;

"FBI will have a nominee purchase for cash all those capital notes which note holders wish to convert. No shares will be issued following an election to convert capital notes."

I will be paying close attention to Mondays announcement. My instinct is to convert for cash. I don't relish being in the creditors queue behind banks when an outfit is in breach of banking covenants.

I am surprised a company under stress is enabling capital note holders who are owed $100 mil to take the money and run if they choose.

Boop boop de do
Marilyn

[macduffy]

Neither would they want an uncertain degree/amount of conversion to shares with the prospect of an equity raising around? Would complicate negotiations with instos and/or terms of a prorata cash issue or a share purchase plan offer.They probably expect a reasonable degree of re-investment considering the lack of alternative fixed interest options at present.