Fletcher Building shares are expected to begin trading this morning with brokers poised to update their forecasts once the bad news is absorbed.
The construction company has had a tortured run of losses from its Buildings + Interiors (B+I) division and the news is likely to get much worse as it prepares to disclose more material losses.
Australian research firm Morningstar has kept its hold recommendation on Fletcher Building shares as it awaited the lifting of the trading halt.
The announcement made on Thursday made no mention of the scale of the additional losses and management believed it would only be able to provide further clarity today.
The trading notice stated the losses would cause the company to be in breach of one or more of the group’s debt covenants.
Management said the Auckland International Convention Centre project was challenging. Morningstar said the ongoing project carried significant risk until completed.
Spanish firm Acciona Concesiones was conducting due diligence on Fletcher’s Construction business.
Morningstar said the sale of B+I would be a positive by drawing a line under ongoing issues, given Fletcher’s lack of expertise in managing large, complex construction projects.
"There is a strong case to be made for the sale of the B+I business given Fletcher’s questionable ability to manage large, complex projects such as the convention centre," Morningstar said.
