More time to negotiate

FLETCHER Building —New Zealand’s largest construction company — says its bankers have given it more time to negotiate new terms, after it breached its borrowing agreements.

The breaches followed nearly $1 billion of losses from its Building & Interiors Business, caused by cost overruns and delays on major projects, including the International Convention Centre and Christchurch’s Justice precinct.

The bankers have given Fletcher an extension until the end of May so the parties can negotiate new terms.

“Progress has been made in discussions with the lenders on amendments to the funding arrangements and the company will provide a further update once these are finalised,” Fletcher Building said in a statement to the stock exchange.

“Under the terms of the new waiver, the syndicate lenders have now provided access to the company’s full syndicate funding facilities.”

The company declined to make any additional comment.

Fletcher Building has about $2.2 billion in debts, but total borrowing facilities of $3.1b.

However, investment advisors have said Fletcher Building’s financial troubles were far from over and it will likely need to sell assets or raise capital to reduce debt.

Fletcher Building chief executive Ross Taylor had previously said the renegotiation of the banking convenants should not lead to higher interest costs, and the company had more than enough money.

“We are looking to do get the convenants reset, more in line with how our business actually operates. And no, we aren’t expecting any costs, but you can never second guess what the banks will or won’t ask for,” Mr Taylor said in an RNZ Business interview last month.

The company also reaffirmed it is trading in line with expectations for a full year underlying profit of between $680m to 720m, excluding a loss of $660m from the construction business.