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5/3/2018 — General
Waiver provides a respite for FBU
By Simon Hartley

Besieged Fletcher Building Ltd (NZX & ASX: FBU) has secured a crucial waiver from one of its US lenders, and has until the end of the month to finalise new funding terms.

In the wake of going public on the mounting losses of its Building + Interiors division - at present standing at $952 million spread over two financial years - Fletcher had broken some banking covenants with its US Private Placement funding arrangements and a separate banking syndicate, which equated to $2.4 billion in loans or loan facilities.

On Friday, Fletcher said in a market update it had received a waiver of the breach of covenants under its US Private Placement (USPP) funding arrangements, subject to conditions, which it expects to satisfy over coming days.

“The breach of certain covenants occurred as a result of the provision for losses incurred by the company's Building and Interiors business,” the company said.

Fletcher Building had received a similar waiver from its bank syndicate on February 13. Analysts have said the extent of the debt contract terms was at present a “key uncertainty”' for Fletcher, whose stock value has been mauled after multiple downgrades in recent months.

Much of B+I's commercial construction work was done under fixed price contracts, with the Auckland international convention centre alone estimated to come in at a $410 M loss.

Fletcher has until March 31 to complete the amendment process, after which it would have to seek waivers again, from the banking syndicate and USPP note holders.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.

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