sudden drop, page-15

Have to say i was surprised to see AZZ back under 40c.
have followed this stock with others in the Permian Basin and compared to the management of Golden Gate Petroleum this company management are light years in front as far as considering the shareholders and operating a company goes.

Looking for the reason behind the selling lately as I wasn`t going to resist getting stock in this company under 40 cents. Management have backed this price with a buyback when the company had growing pains and opportunities.

As I don`t have the insight of some on here, happy to be shot down with what I have come up with after reading recent announcements and the annual report.

The breach of the loan facility with Macquarie Bank is a serious issue even though they issued a waiver. For mine this should have been announced to the ASX with the details. The timing suggests the breach was realised by Macquarie when the annual accounts were being prepared. Could be way off here but it could be connected with the 16 Million write down of assets which in turn created a breach in the assets/ liability ratio. Getting a waiver suggests its a intangible breach and not a financial one such as a cash ratio problem.

With HSBC and especially JP Morgan as major shareholders (noms accounts) a default notice is a major red flag.
Without the company coming to the market to explain the reason suggests that management are not worth their good salaries even though they have managed the growth well to date. Doubling production to 2000poed within 12 months in an 18 month payback industry (verticle wells) takes economic management expertise.
Agree with a previous post that a share buyback notice will speak volumes but I would rather see an explanation of the breach of the loan facility.

Happy to be back holding this stock.