Sharechat Logo

Steel & Tube gains waiver from lenders after writedowns led to covenant breach

Monday 2nd July 2018

Text too small?

Steel & Tube Holdings said it has obtained a waiver from its banks after writedowns and impairments put it in breach of at least one lending covenant.

In May the Lower Hutt-based supplier of steel building products said it expected a loss on an earnings before interest and tax basis of about $38 million in the year ended June 30 as a result of costs and impairments of as much as $54 million. Steel & Tube reviewed its business under the guidance of a refreshed board and new chief executive Mark Malpass, who started in February.

The review resulted in writedowns from selling the company's plastics business, inventory from its new enterprise resource planning (ERP) system, and other intangibles. Steel & Tube stock plunged after the announcements last month and last traded at $1.45. The stock dropped 42 percent in the past 12 months while the S&P/NZX 50 Index gained 16 percent.

The company "has obtained a waiver from its banking partners for the covenant breach arising as a consequence of the signalled non-trading write-downs and impairments on its FY18 earnings," it said today. "Steel & Tube confirms that formal documentation on terms satisfactory to the company are now in place."

Separately, Steel & Tube said its 2018 results would include a $1.3 million gain on the $21 million sale of its property 375 Blenheim Road in Christchurch, which settled last Friday. It hadn't included the gain in the forecast loss it gave last month. The company will lease back the site.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar rises against Aussie, Chinese yuan
Geothermal production drives record Eastland earnings, payout
RBNZ to announce final decision on bank capital rules by November
Licensing key to medicinal cannabis firm Cannasouth's ambitions
PwC says NZ banks would effectively hold 27.1% equity if RBNZ proposals are adopted
Terra Vitae says poor harvest to hit sales, earnings
Weak services sector growth raises concerns about NZ economic slowdown
National sticks to bob-each-way on US-China relations in new policy paper
Kiwi Property lifts annual profit 15% as valuations rise
Kiwi Property lifts annual profit 15% as valuations rise

IRG See IRG research reports