Hit a low of $6.99 today. I've read that the value it will recover to is between $12-14 (its high was around $13).
While residential building is falling, FBU has a huge backlog of infrastructure and commercial projects though (only bidder with enough resources to build the stadium for RWC...?)
Probably good to accumulate these once the property market stabilises? Don't know where the low is yet, P/E ratio is 6.99 (!)
utopian201 wrote:Based on activity during this week, Id say this stock has stopped its fall. According to some of the indicators I now follow, this stock has started its turn around and will not hit low levels as it did before (low 6s). Last price is $6.81
"It makes Nuplex look generous," Sheppard said of the arrangement whereby Fletcher Building's institutional shareholders will receive 75.7m new shares at a placement price of $5.35 each, a significant discount to the company's share price of $6.20 immediately prior to the capital raising being announced. The company's Australia and NZ-based retail (small) shareholders will also be able to buy up to $100m of new shares, most likely also at $5.35.
While the arrangement had an immediate negative impact on the share price, Sheppard believes the bigger issue for small shareholders is that it dilutes their proportionate share of the company and ultimately their share of its future profits.
"It is a fundamental right of shareholders that when you own a share, it's also your right to own a proportionate share of the whole," he said. "And if the company or the board want some more capital, it is our belief that, in the absence of compelling commercial circumstances, it is the current owners that should be given the right to put the money into the company proportionate to their holding ie, a rights issue."
Sheppard believes compelling commercial circumstances against a rights issue did not exist in Fletcher Building's case, because in its statement announcing the arrangement it restated its belief that its "capital position is strong".
"So they had time, unlike Nuplex which had no time. But it's worse than Nuplex because of the arrogance of it announce it one day and do it the next. Rod Deane [Fletcher Building's chairman] should know better than that and he needs a kick in the bum," he said.
However Sheppard saved his harshest criticism for the third leg of the deal, which will give special rights to large non-institutional investors to top up their shareholdings to reduce the diluting effects of the placement to institutions, an arrangement he said smacked of cronyism.
"You've got a bunch of institutions being offered favourable placements, the rest of us being offered a piddly rights issue, and then you have a select band that get an anti-dilute [deal]. Well f---, if that isn't cronyism I don't know what is," he said.
However Fletcher Building's general manager (investor relations) Philip King said two main factors worked against the company deciding to use a rights issue to raise all of the extra capital. See Full Story at Stuff.co.nz
utopian201 wrote:I was originally going to, seeing that the placement price was $1.20 below the market price. But I'm betting that the prices will drop due to dilution after the placement plan.
As originally proposed, participation in the Top-Up Offer was conditional upon the Share Purchase Plan (“SPP”) not being fully subscribed. This meant that if applications under the SPP exceeded the maximum limit of $100 million, there would not be any shortfall of shares available for issue to those shareholders who applied under the Top-Up Offer.
To provide certainty to eligible investors, Fletcher Building is varying the terms of the Top-Up Offer so that it is no longer conditional upon there being a shortfall under the SPP. The effect of this variation is that even if applications under the SPP exceed the maximum limit of $100 million, shares will still be issued to eligible applicants under the Top-Up Offer, up to the maximum value of $20 million. With this variation, the maximum amount of new equity that Fletcher Building can potentially raise under the SPP and Top-Up Offer will be $120 million, compared with $100 million prior to this variation. The underwritten SPP amount of $60 million remains unchanged.
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