FBU-Fletcher Building

[snapiti]

interesting they were in total denial not that long ago, now have offered uncapped remedial works.
Negotiating would have been simple.....
your product is defective and we are gonna recall it.

If you do that we will have to put the company in receivership (FBU Aust) and nobody gets anything.
We propose we offer uncapped remedial work and fix the issues as they arise, that way we can make provisions (that our Shers are use to) whenever it suits to do so.
This issue is going to haunt the company for decades.

[Basil]

that way we can make provisions (that our Shers are use to)

Yeap regular $100m+ so called one off extraordinary items are just the usual at FBU as per Winners excellent recent image, see post#337
In fact, it's quite rare to have a year when there are extraordinary items of less than $100m lol.

[winner (n)]

Significant item so doesn't really count in profit reporting

But going to hurt future cash flows quite significantly

[Basil]

Significant item so doesn't really count in profit reporting

But going to hurt future cash flows quite significantly

Market already starting to fret a bit.  Fletcher bonds which were already trading at elevated level's of around 9% recently are now second only to Synlait in terms of trading at semi distressed level's.  e.g. FBU190 11.75% FBU 200 March 2026 bonds 11.25%  I reckon those will go higher still and am definitely not a buyer.
Speaking of distressed and all things Synlait, those bonds now at 27% and heading back up over Penno objection complaint which the NZX are obviously taken seriously, or they would have already dismissed it.  I reckon he has appointed high powered lawyers who may be threatening a high court injunction if the matter is not resolved to his satisfaction.  That's not over by any stretch of the imagination.

[Teitei]

Market already starting to fret a bit.  Fletcher bonds which were already trading at elevated level's of around 9% recently are now second only to Synlait in terms of trading at semi distressed level's.  e.g. FBU190 11.75% FBU 200 March 2026 bonds 11.25%  I reckon those will go higher still and am definitely not a buyer.
Speaking of distressed and all things Synlait, those bonds now at 27% and heading back up over Penno objection complaint which the NZX are obviously taken seriously, or they would have already dismissed it.  I reckon he has appointed high powered lawyers who may be threatening a high court injunction if the matter is not resolved to his satisfaction.  That's not over by any stretch of the imagination.

Those are not bonds but capital notes - effectively equity as they are not only subordinated to all indebtness of FBU but are repayable only via conversion into FBU shares! Noteholders can choose to rollover into another series of capital notes or convert into FBU shares. With FBU shares slip sliding lower, hardly the sort of fixed interest securities that prudent income investors would want to hold.  Get the shares and by the time a noteholder sells, they may find it is down 20%!

Some Synlait bonds obviously are still held by some nervous souls some of whom sold their bonds at 40 cents in the dollar not that long ago. Same bonds are currently trading at 94.5c. 

Penno is wasting his money and time but hi, he must be beating himself up and wondering why he initiated the Pokeno plant as CEO, tried a fast one on ATM with his own company and did not sell his 5.1m shares when he could at $10+?  Are the institutions (who voted overwhelmingly for the Bright loan of $130m) going to support his hara kiri exercise? Do turkeys vote for Christmas?

[Teitei]

The in-principle agreement in perspective for affected homeowners and BGC.

Lots more water to flow under the bridge - so to speak.

https://www.watoday.com.au/national/western-australia/iplex-builders-government-to-pay-up-for-leaking-pipes-in-wa-homes-20240830-p5k6ou.html

Thousands of West Australians are part of a federal class action against Iplex over the matter.

BGC is also pursuing litigation.

In a statement, Iplex said it intended to defend the lawsuits.

"Despite reaching an in-principle agreement on the Joint Industry Response, legal and financial risks remain for Iplex AU and Fletcher Building.," it said.

"If a current or future matter was successfully brought against Iplex AU, it may have a material adverse impact to the group."

[Basil]

Those are not bonds but capital notes - effectively equity as they are not only subordinated to all indebtness of FBU but are repayable only via conversion into FBU shares! Noteholders can choose to rollover into another series of capital notes or convert into FBU shares. With FBU shares slip sliding lower, hardly the sort of fixed interest securities that prudent income investors would want to hold.  Get the shares and by the time a noteholder sells, they may find it is down 20%!

Thanks for unpacking that.  They really are junk bonds then and now that FBU has another NZICC sized fiasco on its hands why would anyone bother given the vast size of FBU's senior debt !

[Shareguy]

The in-principle agreement in perspective for affected homeowners and BGC.

Lots more water to flow under the bridge - so to speak.

https://www.watoday.com.au/national/western-australia/iplex-builders-government-to-pay-up-for-leaking-pipes-in-wa-homes-20240830-p5k6ou.html

Thousands of West Australians are part of a federal class action against Iplex over the matter.

BGC is also pursuing litigation.

In a statement, Iplex said it intended to defend the lawsuits.

"Despite reaching an in-principle agreement on the Joint Industry Response, legal and financial risks remain for Iplex AU and Fletcher Building.," it said.

"If a current or future matter was successfully brought against Iplex AU, it may have a material adverse impact to the group."

Unless insurance covers a great part of this or they sell some stuff I think Forbar are right, that a cap raise is coming.

Ross coming out all guns blazing with denials and in a few short months FBU are once again forking out, does not bode well. I think the claims are going to be huge and based on FBU past experience share holders will pay the price.

Fletchers have some great buisiness"s and I'm sure plenty of great people who at the moment are all probably looking at thier future. A number of the staff will have lost out on a good chunk of their bonuses because of all this.

I cant see any buyer having a go at this company while these claims are active.

Good luck to holders

[Shareguy]

Less than I expected. I'm surprised at the share price holding up. When you consider the company's history, projects still not completed, BGC claim estimated by them $A700m plus the class action.  I would have thought any cr would have to be very heavily discounted and even then I can't see many institutions taking a gamble. I have been reading the Reddit thread on the leaking pipes, not good.

https://www.afr.com/street-talk/fletcher-building-wall-crosses-investors-for-500m-plus-raising-20240920-p5kc61

https://www.bgc.com.au/bgc-open-to-joining-industry-agreement-but-precluded-due-to-litigation-seeking-security-of-a-long-term-deal/

https://iplexclassaction.com.au/

[entrep]

oooooooooooooooooooooooooooffff

https://www.nzx.com/announcements/438502

[Basil]

Great....another large capital raise / dead rat for the market to swallow.

[Shareguy]

Yep. Will be interesting in how many retail investors participate. It's all going on debt repayment. FBU say "supports our commitment to maintaining an investment grade credit rating and covenant headroom under our debt facilities".

In other words it's a bloody emergency. We are bleeding cash and the future is going to bleed more cash and the banks or bank want out as we approach covenant headroom ceiling.
 

[Basil]

Presentation  https://api.nzx.com/public/announcement/438502/attachment/427718/438502-427718.pdf

Proceeds all going on debt repayment.  As Shareguy has mentioned, forget all the creative corporate B.S. speak, banks put a gun to their head and told them to reduce debt or else ! 

My 2 cents. It won't take them all that long to get into deep doggy doo again.
Disc: I've never been an investor in FBU.

[BlackPeter]

Quite amazing ... asking for $700m at $2.40 per share.

Interesting wording in the announcement as well:

"Whilst the Company expects that market conditions will eventually recover ...."

Based on my limited understanding of the English language does "eventually" mean an unspecified but normally quite long time frame.

Hmm.

Just wondering, whether we might eventually see a "$1" handle for the shares - and whether the latter might happen in a shorter timeframe than the recovery of Fletchers specific market conditions?

Anyway - so glad I sold my parcel before the latest company droppings (yes, I admit it - at some stage I still thought they might be able to benefit from the emerging green shoots in the economy) ... much more fun to watch these dramas unfold without having skin in the game.

[Basil]

Based on my limited understanding of the English language does "eventually" mean an unspecified but normally quite long time frame.

Hmm.

Just wondering, whether we might eventually see a "$1" handle for the shares - and whether the latter might happen in a shorter timeframe than the recovery of Fletchers specific market conditions?

Cambridge Dictionary describes the word eventually to mean

eventually
adverb
uk  /ɪˈven.tʃu.ə.li/ us  /ɪˈven.tʃu.ə.li/
Add to word list
B2
in the end, especially after a long time or a lot of effort, problems, etc.:
Although she had been ill for a long time, it still came as a shock when she eventually died.

Oh dear...the reference to death is perhaps a little unfortunate.  As to the prospects of this eventually having a $1 handle, as Winner astutely points out on the other channel.

"7 pages of Disclaimer .......and 15 pages of 'what can go wrong'
More than half the presentation"

Must admit, I have never seen such a comprehensive backside covering set of statements in a presentation before.
I think its fair to say they want to avoid the prospects of even more lawsuits lol
What could possibly go wrong in all this mess lol