Around a fortnight ago, I was in the local library, reading. Two grey haired retirees were talking about Multiplex. Each had bought shares in this company, thinking of bottom fishing and were talking about buying more.
Their reasons for buying were : Share price has fallen so far - must be near the bottom and thus, a bargain. Multiplex signboards are all over town, indicating how many projects they have. Encouraged by each other's agreement between themselves, they said they would buy more shares.
As I did not know them, I did not discourage them and said nothing. I walked away. Pity how they do their investments on such simplistic notions. They had no concept of how risky their money was now placed.
Here's the latest:
Multiplex's Wembley Losses May Rise, Founder Resigns
May 27 (Bloomberg) -- John Roberts quit as executive chairman of Multiplex Group, Australia's worst-performing property stock, after the company said losses at its Wembley Stadium Project in London may ``significantly'' exceed the A$50 million ($38 million) his family agreed to cover.
An internal report indicates the profit margin at the A$1.2 billion Wembley project ``may have deteriorated significantly,'' Sydney-based Multiplex said in a statement today. The company will give more details when it updates 2005 and 2006 profit forecasts early next week, spokesman Mathew Chandler said.
Multiplex is confident it will complete the 90,000-seat stadium project in time for the English F.A. Cup final on May 13, 2006, Chandler said. Multiplex shares dropped 42 percent since Feb. 24, when the company reversed previously booked profit from the stadium because a contractor dispute boosted costs.
``We're all guessing here what else can possibly go wrong with this thing -- it's just unbelievable,'' said Lucinda Chan, head of Asian business at Macquarie Equities in Sydney. ``Credibility is a major issue for this company -- it's going to be scrutinized very harshly,'' she said.
The original Wembley Stadium, famous for its twin towers and for hosting England's victorious 1966 World Cup final, first staged the annual F.A. Cup final in 1923. Since its closure in 2000, Cardiff's Millennium Stadium has held the final.
Roberts, 72, leaves the company after his family agreed in February to cover losses from Wembley as Multiplex tried to rebuild credibility with investors.
The company first advised shareholders of the problems three months after it had showcased Wembley and other U.K. projects to investors in November and sold A$120 million of shares at A$5.45 apiece in December to fund its expansion.
Stock Halted
The shares, which were halted today, traded at A$3.26 yesterday in Sydney. They are the worst performers among 26 Australian property companies in the S&P/ASX 300 Property Trust Index this year.
Chief Executive Andrew Roberts and Chief Financial Officer John Corcoran weren't available to comment today, Chandler said.
Wembley stadium is owned by the English National Stadium Development Co., a unit of the Football Association, English soccer's governing body. Multiplex had ``a high level of confidence that we will meet our contractual obligation relating to the completion,'' Chandler said.
Multiplex revised profit at Wembley to zero after a change in a steel contractor led to litigation and higher costs. The project had been expected to yield A$30 million in annual earnings before interest and taxes in 2005 and 2006, according to an estimate by Goldman Sachs JBWere Pty in February.
Litigation
Multiplex needs to win about A$110 million in litigation claims to break even from the project, according to a presentation the company gave in February. It has written off A$48 million on the project. Spokesman Chandler wouldn't comment on the current status of the legal proceedings.
``To achieve break even, Multiplex will need good lawyers,'' Paul Snushall, an analyst at Merrill Lynch & Co. wrote in a note after the problems were disclosed in February.
Today's announcement came after the stock plunged to a record low on May 18, when the builder sold its 12.5 percent stake in the White City development, the biggest shopping center in London, to Westfield Group for a 10 million pound profit to free funds for other developments.
Multiplex last week said speculation the sale was forced by its bankers because of financial difficulties was unfounded. It has ``substantial cash at hand,'' available credit lines of more than A$400 million, and settled the sale of A$1 billion of commercial mortgage-backed bonds on May 20.
Macquarie's Chan said Multiplex ``is yet to have a good grasp of where their losses are and what it's all about.''
John Roberts is Australia's 12th-richest man, worth an estimated A$1.1 billion, according to BRW magazine's annual Rich List. His family controls 26 percent of Multiplex, which he founded in 1962. His son, Andrew, is chief executive officer.
John Roberts will be replaced by an independent chairman from outside the company, Multiplex said. He will stay with Multiplex as a director. Deputy Chairman Allan McDonald was named non- executive chairman.
The founder's resignation ``was a voluntary decision,'' Chandler said today. Roberts ``will certainly remain very active as he's always been in the strategic growth of the business.''
Noel Henderson, head of Multiplex's construction unit, also resigned as a director, making way for a new independent director with property experience in the U.K. The company will start interviewing candidates for that position in July, Chandler said.
Their reasons for buying were : Share price has fallen so far - must be near the bottom and thus, a bargain. Multiplex signboards are all over town, indicating how many projects they have. Encouraged by each other's agreement between themselves, they said they would buy more shares.
As I did not know them, I did not discourage them and said nothing. I walked away. Pity how they do their investments on such simplistic notions. They had no concept of how risky their money was now placed.
Here's the latest:
Multiplex's Wembley Losses May Rise, Founder Resigns
May 27 (Bloomberg) -- John Roberts quit as executive chairman of Multiplex Group, Australia's worst-performing property stock, after the company said losses at its Wembley Stadium Project in London may ``significantly'' exceed the A$50 million ($38 million) his family agreed to cover.
An internal report indicates the profit margin at the A$1.2 billion Wembley project ``may have deteriorated significantly,'' Sydney-based Multiplex said in a statement today. The company will give more details when it updates 2005 and 2006 profit forecasts early next week, spokesman Mathew Chandler said.
Multiplex is confident it will complete the 90,000-seat stadium project in time for the English F.A. Cup final on May 13, 2006, Chandler said. Multiplex shares dropped 42 percent since Feb. 24, when the company reversed previously booked profit from the stadium because a contractor dispute boosted costs.
``We're all guessing here what else can possibly go wrong with this thing -- it's just unbelievable,'' said Lucinda Chan, head of Asian business at Macquarie Equities in Sydney. ``Credibility is a major issue for this company -- it's going to be scrutinized very harshly,'' she said.
The original Wembley Stadium, famous for its twin towers and for hosting England's victorious 1966 World Cup final, first staged the annual F.A. Cup final in 1923. Since its closure in 2000, Cardiff's Millennium Stadium has held the final.
Roberts, 72, leaves the company after his family agreed in February to cover losses from Wembley as Multiplex tried to rebuild credibility with investors.
The company first advised shareholders of the problems three months after it had showcased Wembley and other U.K. projects to investors in November and sold A$120 million of shares at A$5.45 apiece in December to fund its expansion.
Stock Halted
The shares, which were halted today, traded at A$3.26 yesterday in Sydney. They are the worst performers among 26 Australian property companies in the S&P/ASX 300 Property Trust Index this year.
Chief Executive Andrew Roberts and Chief Financial Officer John Corcoran weren't available to comment today, Chandler said.
Wembley stadium is owned by the English National Stadium Development Co., a unit of the Football Association, English soccer's governing body. Multiplex had ``a high level of confidence that we will meet our contractual obligation relating to the completion,'' Chandler said.
Multiplex revised profit at Wembley to zero after a change in a steel contractor led to litigation and higher costs. The project had been expected to yield A$30 million in annual earnings before interest and taxes in 2005 and 2006, according to an estimate by Goldman Sachs JBWere Pty in February.
Litigation
Multiplex needs to win about A$110 million in litigation claims to break even from the project, according to a presentation the company gave in February. It has written off A$48 million on the project. Spokesman Chandler wouldn't comment on the current status of the legal proceedings.
``To achieve break even, Multiplex will need good lawyers,'' Paul Snushall, an analyst at Merrill Lynch & Co. wrote in a note after the problems were disclosed in February.
Today's announcement came after the stock plunged to a record low on May 18, when the builder sold its 12.5 percent stake in the White City development, the biggest shopping center in London, to Westfield Group for a 10 million pound profit to free funds for other developments.
Multiplex last week said speculation the sale was forced by its bankers because of financial difficulties was unfounded. It has ``substantial cash at hand,'' available credit lines of more than A$400 million, and settled the sale of A$1 billion of commercial mortgage-backed bonds on May 20.
Macquarie's Chan said Multiplex ``is yet to have a good grasp of where their losses are and what it's all about.''
John Roberts is Australia's 12th-richest man, worth an estimated A$1.1 billion, according to BRW magazine's annual Rich List. His family controls 26 percent of Multiplex, which he founded in 1962. His son, Andrew, is chief executive officer.
John Roberts will be replaced by an independent chairman from outside the company, Multiplex said. He will stay with Multiplex as a director. Deputy Chairman Allan McDonald was named non- executive chairman.
The founder's resignation ``was a voluntary decision,'' Chandler said today. Roberts ``will certainly remain very active as he's always been in the strategic growth of the business.''
Noel Henderson, head of Multiplex's construction unit, also resigned as a director, making way for a new independent director with property experience in the U.K. The company will start interviewing candidates for that position in July, Chandler said.
