Fletcher Building, which had planned to reveal bigger losses at its building and interiors (B+I) unit, has extended its trading halt until Wednesday saying it has yet to complete a review of key projects and has begun talks with lenders about breaching covenants.

The company first had its stock and capital notes halted last week, saying it expected to breach one or more of its debt covenants because of further “material losses” at B+I. The halt was to have lifted on Monday.

“The current expectation of the board is that there will be further material losses in the B+I business beyond what was provided for in October 2017 and that once those further losses are determined and provided for, this will result in a breach of one or more of the covenants in the group’s financing arrangements,” it said in a statement, repeating comments it made last week.

It had started discussions with its lenders in relation to the expected covenant breaches.

Fletcher said the trading halt would lift before the start of trading on Wednesday and it would provide an update beforehand.

In October, chairman Ralph Norris apologised to shareholders at their annual meeting for Fletcher’s mistakes as the company took a further $125 million provision against problematic construction contracts including the Convention Centre in Auckland and the Justice Precinct in Christchurch and said its B+I unit would report a full-year loss of $160m.

Auckland-based Fletcher had net debt of $1.95 billion as at June 30 last year.

Its biggest source of debt funding is the private placement market at about $1.26b and it had $389m in loans via its syndicated revolving credit facility with ANZ, Bank of Tokyo-Mitsubishi UFJ Ltd, BNZ, Commonwealth Bank of Australia, Citibank, Hongkong and Shanghai Banking Corp and Westpac.

Fletcher shares last traded at $7.77 and have tumbled 23 per cent in the past 12 months.


By Jonathan Underhill