suspension, page-43

Hastie says it can meet its obligations
Tracy Lee From: The Australian March 22, 2011 12:00AM

COMMERCIAL air-conditioning and refrigeration services provider Hastie Group has shrugged off market concern that it will not meet its financial obligations in spite of delays to finalising its capital raising plans.

There were expectations the group would be in a position to launch the $100 million-plus capital raising today after more than a month of negotiations with lenders and advisers.

It is thought discussion on the raising has been stalled on price.

A spokesman said last night that the company "categorically rejects any assertion that it would not be able to meet its financial obligations".

There were initial hopes of a 15-20 per cent discount to its last closing price of 92.5c.

Hastie needs the additional capital to provide the necessary support for the business as it seeks to trade out of an especially slow period in sales.

The troubled position of the group is evidence of the tough economic conditions most businesses not connected to the booming resources sector face as they strain against poor consumer sentiment and weak corporate demand for services.



The Macquarie Bank-advised group has been hit by delays by major clients such as supermarkets undertaking refrigeration work associated with new store rollouts and refurbishment programs.

It has also suffered significant business disruptions from the extreme weather in Queensland.

The Sydney-based Hastie has been in discussion with its lenders and advisers since last month, when it revealed it needed to halt trading in its shares to determine how best to bolster its capital position.

The group had been confident it could trade out of its difficult position with a strong order book expected to deliver the badly needed earnings kick in the second half of the calendar year.

Major contracts for the group include work on the Royal Adelaide Hospital.

Hastie was granted relief from having to report its half-year results when it moved into a trading halt. In November last year, it flagged a downgrade to earnings at its annual meeting when it said earlier forecasts for a 10 per cent lift in earnings was no longer achievable.

Its last update said it expected its full-year 2011 result to be flat, suggesting earnings before interest and tax of about $77m.

JPMorgan analyst Richard Bailey noted that Hastie faced a tough economic environment.