Shares in Forge Group have been suspended from trading after news emerged that key financial backers have rescinded their support.
The troubled engineering group issued a statement to the Australian Securities Exchange announcing that the trading halt would come into effect immediately, and that shares would remain suspended until further notice is forthcoming.
Forge said that it expects to make such an announcement prior to the week’s end.
The primary reason for Forge’s decision to call for the trading halt has been the withdrawal of support by chief financial backer ANZ Bank, as the engineering group’s woes continue to worsen.
“Forge Group has this morning been advised that its financiers have withdrawn support for the company,” Forge said in an official statement.
ANZ Bank had previously come to Forge’s rescue towards the end of last year when the the company faced the prospect of insolvency over burgeoning losses from two of its key power station projects – the Diamantina Power Station and the West Angelas Power Station, which at the time led to a staggering $127 million writedown.
Shares in Forge plunged 83 per cent following news of the mammoth writedown, but the company subsequently managed to stage a rally when it signed a deal for the construction of a $1.47 billion processing facility at Roy Hill. This news prompted a surge in its share price of 54 per cent just prior to the end of the year.
That boost to the company’s prospects proved to be all too fleeting, however, with Forge flagging a fiscal loss in 2014 of up to $25 million at the end of February, as a result of both macro conditions and one-off factors. At that time, however, Forge indicated that it continued to retain the support of ANZ Bank.
Last week WestBusiness reported that Forge had appointed Euroz Securities to run a data room for potential investors, attracting interest from at least three rival engineering firms based in Western Australia, as well as a number of private equity players.