Performance strong despite share bailout: Asciano


Dramatic share price crash doesn't reflect performance or ability to repay debt, Asciano insists

Performance strong despite share bailout: Asciano
Performance strong despite share bailout: Asciano
Asciano’s dramatic share price crash does not reflect the performance of the logistics operator or its ability to repay debt, the company insists.

Chairman Tim Poole has written to nervous shareholders in the wake of the share declines and rampant media speculation over the company’s future, after the price crashed 60 percent lower to under 70 cents this morning.

The company put its shares in a trading halt after regulators demanded answers.

But in his letter to shareholders, Poole says the dramatic reduction in the company’s value is pure media speculation.

"The board shares your concern and I can assure you that the recent price weakness is no way a reflection of the underlying performance of Asciano’s businesses, which continues to be sound," he writes.

Poole says the business remains on track to meet budget expectations in October, and earnings are in line with budget.

In fact, the four months to October have shown a 6 percent increase in earnings over the previous year, he says.

"This continued solid performance during an uncertain economic environment highlights the resilience of our businesses and the quality of our operations and our people," Poole says.

The ‘business unit monetisation process’ launched by Asciano – which will see external financial partners brought directly into business divisions – is "well advanced".

Poole says the process will "assist in funding the range of new growth opportunities available to Asciano, and to increase Asciano’s flexibility in terms of its future funding requirements".

"Representatives of Asciano have recently met with a range of potential financial partners to discuss Asciano’s monetisation plans, with a particular focus on Asciano’s preferred strategy of a partial monetisation of the Pacific National coal haulage business," he says.

"The feedback from these meetings has been encouraging, and there is a high level of interest in Asciano’s businesses. We expect to be in a position to provide further updates to the market as this process continues over coming weeks."

Despite speculation the company is struggling to pay its significant debts since forming in the wake of a demerger from Toll Holdings, Poole says Asciano is in full compliance of its banking covenants and "expects to remain in compliance with these covenants going forward".

"Asciano’s banking facilities have no security-price or market capitalisation covenants, meaning that the recent security price weakness has no impact on our banking arrangements," he says.

Poole also rejects speculation the company is about to launch a major new financing drive. There were reports Poole was in talks with a private equity firm in the last fortnight.

"This is not the case. Asciano is not currently contemplating an ordinary equity raising, and has not approached or appointed any advisers in respect of such a capital raising," he says.

"Whilst this sort of uninformed speculation has an impact on Asciano’s securities price, it also has the potential to raise doubts about Asciano’s strategy.

"I can assure you that Asciano has great businesses that will deliver returns and growth to security holders, and has a clear and committed strategy to deal with the longer term balance sheet issues."

Asciano shares will resume trading tomorrow.

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