FBU - Fletcher Building

[macduffy]

I'd agree, peat. The March '21 notes might be a better bet but even so, there must be better bets to be had on the market!

[Beagle]

i must say I start to look a bit sideways at their debt issues now. FBI170 5 year notes being rolled over at coupon of 5% - with 5 year swap rate at 2.7% , that is a reasonable corporate premium , much more than some recent ones that were lower than Term Deposits.
But is it enough to compensate for that increased uncertainty - the feeling that surely must lurk now in all prudent investors - is this the beginning of some slope into worse and worse troubles and eventually the unthinkable.
Other notes are now at yield premium to issue (meaning a capital loss for holders)
I dont think I'd be game to lend to them for 5 years now - even with liquidity allowing an early sale.

Agree 100%. Just because other issuance by other companies on similar terms has been even lower than 5% doesn't make these notes attractive at that rate. I would go further. They have at this point no confirmed long term debt arrangements in place and this therefore constitutes a material risk at present. I would think one or two trades today in their capital notes at about 7% are where these should be at but quite frankly even at that yield I see better opportunities with far more stable and vastly better managed companies elsewhere, albeit not in the bond market.

[peat]

Indeed Beagle
This article outlines the risk well
https://www.interest.co.nz/opinion/9...tcher-building

"I'm now more certain than ever that Fletcher WILL have to go to shareholders for more capital - and possibly quite a chunky amount.....
I, for one, am not prepared to say this couldn't get worse yet."

[Baa_Baa]

Indeed Beagle
This article outlines the risk well
https://www.interest.co.nz/opinion/9...tcher-building

"I'm now more certain than ever that Fletcher WILL have to go to shareholders for more capital - and possibly quite a chunky amount.....
I, for one, am not prepared to say this couldn't get worse yet."

Perhaps there others who are somewhat confounded by the relatively modest market reaction to a horror story in FBU? I suppose tomorrow's another day and this could come home to roost over a few more days or weeks, but a modest 9% mark down or so on the day is almost as pathetic as the circumstances that got them into such a pickle. Clearly the force is strong amongst FBU diehard shareholders.

[Joshuatree]

Buyers for $102 mill of shares today. OK fess up who's been buying, its great being a contrarian buyer but do you really think its overshot and the mkt's got it wrong, i dont, rotten for a long,long, looonnnggg time and an embarrassment to this country. Its been the automatic selection by brokers for their clients portfolios right up until now regardless of performance; and beyond?

Maybe its the spanish construction company building a stake or another co or shorter borrowing stock at mkt rates. And chairman ralph why hang around and collect more gravy until october? Not a good look.


Whenever i take the lid of my compost bin i think of FBU.

[minimoke]

Lest see if I have this right. Company announces.
- it takes 3 goes to get its books roughly right
- its about to loose approx. 25% of its total revenues.
- 25% of its business is about to write off about 100% of the profit of the other parts of the business
- employees responsible for this get to keep jobs in the company
- shareholders get to share zero % of the 75% of the business profit.

And this is worth a 9.3% discount on shareprice (which includes say 3% to cover the "Great Feb 2018 Share Market Crash")

Those kind of shareholders are not a bunch I would want to be part of.

[winner69]

Buyers for $102 mill of shares today. OK fess up who's been buying, its great being a contrarian buyer but do you really think its overshot and the mkt's got it wrong, i dont, rotten for a long,long, looonnnggg time and an embarrassment to this country. Its been the automatic selection by brokers for their clients portfolios right up until now regardless of performance; and beyond?

Maybe its the spanish construction company building a stake or another co or shorter borrowing stock at mkt rates. And chairman ralph why hang around and collect more gravy until october? Not a good look.


Whenever i take the lid of my compost bin i think of FBU.

and $40m on the ASX as well

[blackcap]

Lest see if I have this right. Company announces.
- it takes 3 goes to get its books roughly right
- its about to loose approx. 25% of its total revenues.
- 25% of its business is about to write off about 100% of the profit of the other parts of the business
- employees responsible for this get to keep jobs in the company
- shareholders get to share zero % of the 75% of the business profit.

And this is worth a 9.3% discount on shareprice (which includes say 3% to cover the "Great Feb 2018 Share Market Crash")

Those kind of shareholders are not a bunch I would want to be part of.

Kinda thanking my lucky stars I managed to get $6.89 for my partners last lot of FBU shares today. Really thought I would be looking at the low $6's or even under...

[peat]

feels like the posse are getting ready for a collective short (kinda like a class action),
I know I'm a bit tempted - my thinking is like - what could possibly go right at this point, and even if it did they have to make half a billion dollars to be back in the same position they were for a $8 share (and that surely isnt going to happen overnite). So to short would be risking a dollar a share max, and to compare that with say making 3 dollars max on the downside - almost starting to feel like a good risk/reward ratio. And thats without even factoring in a bear market.

[value_investor]

I'm just baffled that people are still putting money into this, because in recent memory I haven't seen a company in NZ as high profile as this fold so many times..

I still think that this the estimates they've made are on a best case scenario that they will only make these losses. Anything else happens between now and these projects finishing, which is years from now and the costs get blown out even more.

This really should be trading lower than it is. Beware the bull.