Australian (ASX) Stock Market Forum

FGE - Forge Group

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skc said:
The announcement is not nearly as bad as feared. The company is pretty much saved for now.

The share price action however, is devastating for holders.

I bought some at 34c... probably close today near $1 imho.
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I dont know about a dollar today but you would think that it couldnt go much lower than 34c.

I cant remember such a spectacular fall in such a short period of time.

I still have 3thousand left that i kept when I sold out earlier in the year.

I wish i had sold those as well.:banghead:
 
Well... it's a xmas present alright. Sometimes the market wasnt to put money in your pocket and you just have to accept it gracefully.

Only up a casual 240% in about an hour.

Did those lazy insto managers not read the announcement?! It didn't read that bad and I was going to buy @ $1 if it opened there.

Volume now approaching 50m shares out of 86m shares on issue... Unbelievable.

There's going to be volatility along the way, but we'd see well north of $1 in the next few months imho.
 
skc said:
Well... it's a xmas present alright. Sometimes the market wasnt to put money in your pocket and you just have to accept it gracefully.

Only up a casual 240% in about an hour.

Did those lazy insto managers not read the announcement?! It didn't read that bad and I was going to buy @ $1 if it opened there.

Volume now approaching 50m shares out of 86m shares on issue... Unbelievable.

There's going to be volatility along the way, but we'd see well north of $1 in the next few months imho.
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I got in at $0.42

Announcement was much better than I was expecting. It looks like every insto sold out on the open. What idiots. I had no idea it would open that low, I thought maybe $1.50-$2.
 
skyQuake said:
Boy am I glad I got up this morning.

I agree with the saved for now bit. But that's assuming management doesn't f*ck up or conditions don't worsen!

Edit: im out after halt
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Good timing.

I got half out @ ~80c. Going to hold onto the other half and look for $1 (probably won't get there today by the looks).

My first ever triple digit % day trade :D
 
skc said:
Well... it's a xmas present alright. Sometimes the market wasnt to put money in your pocket and you just have to accept it gracefully.

Only up a casual 240% in about an hour.

Did those lazy insto managers not read the announcement?! It didn't read that bad and I was going to buy @ $1 if it opened there.

Volume now approaching 50m shares out of 86m shares on issue... Unbelievable.

There's going to be volatility along the way, but we'd see well north of $1 in the next few months imho.
Click to expand...

Nice one!

I agree with your sentiment on the ST future of the price...
It's not going under and anything sub $1 is decent swing buying IMO...

The turnover rate is extreme!
 
Why didn’t they go to shareholders with a rights issue? If it’s only liquidity and the bigger picture is still intact it shouldn’t have been that hard a sell and default risk could have been removed.

Going to the banker just puts them in deeper risk of default and gives the banker greater insight.

With the bank having a bigger bet at stake they will be even more likely to yank the mat to recover their funds at the slightest hint of the recovery not working out.

There is less ability now to reduce default risk. Seems an unnecessary default risk to take to avoid dilution, especially as dilution doesn’t matter as much if every shareholder is given a proportional opportunity to provide the funding or be diluted as they see fit.

Will a strong white night equity player willing to put more capital in, position into the register at these levels to underpin a future equity injection. What does the industry really think of their order book?

Well done to those making short term profits (not me on this one) but If I was playing it would just be on the swings for a while – I don’t read the outcome as positive at all except for – it’s not dead yet – a full prospective and a rights issue would have been much more encouraging - could still be lots of selling to come if somebody doesn’t step up to recapitalise it, and at what price are they prepared to do it. ( I don't know enough to even make a stab at the answer)

Interesting times.
 
I didn't realise the announcement came out today, but I had a forum subscription to this thread, in which skc so kindly alerted me to this situation. So I came in late to the party @ 0.495.

I think their intention was to do an issue, but as they would have needed to lodge a full prospectus, it would take too long, with liquidity crisis looming in December.

Having a quick look over their warrant notes, I believe they still can do an issue later on.
 
I only just got inside now and in front of a computer. Wow skc you must sit and watch the screen like a hawk with that timing. Great job. FGE is probably worth north of $2 based on the news but show me a mining services company that is trading at real value. $1 would be a target. I may have missed the boat but I grabbed a very small parcel at 0.68 just now. Unfortunately I don't have time to watch the screen. Let's see if we get to $1.
 
craft said:
Why didn’t they go to shareholders with a rights issue? If it’s only liquidity and the bigger picture is still intact it shouldn’t have been that hard a sell and default risk could have been removed.

Going to the banker just puts them in deeper risk of default and gives the banker greater insight.

With the bank having a bigger bet at stake they will be even more likely to yank the mat to recover their funds at the slightest hint of the recovery not working out.

There is less ability now to reduce default risk. Seems an unnecessary default risk to take to avoid dilution, especially as dilution doesn’t matter as much if every shareholder is given a proportional opportunity to provide the funding or be diluted as they see fit.

Will a strong white night equity player willing to put more capital in, position into the register at these levels to underpin a future equity injection. What does the industry really think of their order book?

Well done to those making short term profits (not me on this one) but If I was playing it would just be on the swings for a while – I don’t read the outcome as positive at all except for – it’s not dead yet – a full prospective and a rights issue would have been much more encouraging - could still be lots of selling to come if somebody doesn’t step up to recapitalise it, and at what price are they prepared to do it. ( I don't know enough to even make a stab at the answer)

Interesting times.
Click to expand...

I think they didn't go to shareholders because they couldn't get the prospectus out of the way in time. They probably tried placement with instos first and the price they were not happy with the price they'd get. They wanted to do an accelerated rights issue but ASIC blocked them so they needed a full prospectus. By the time they could complete that and get money in the bank, it'd be well after Xmas - but their cash crunch is now.

It's a positive outcome against what was worst feared. The fact that it was rumoured to be dead (as explained by the 90% fall today) vs a completely different outcome where the banks supported the company with a warrant deal. It's a massive difference.

At 70c it is only worth $60m... so ~1.5x pro-forma EBITDA of $45-50m (if one chooses to believe that). Total debt is $60m (by the looks) so it's about 1.5x EBITDA as well. So while not nearly as pretty as before (and probably not ideal shape going into a mining capex cliff), a market cap settling at around $100m is not at all unreasonable.
 
I am out at $0.70.

I agree that it is still very cheap at this price, but it doesn't quite fit my criteria.

I bought because there was obvious fear with everyone selling at ANY price. I thought there was very little downside buying at those price. I expected a rebound once the initial sells were done and was planning to sell the same day regardless of whether I made a profit or not.

I am obviously quite happy that it worked out, even though my parcel size is quite small.

I am now reading David Dreman's "Contrarian Investment Strategies" and a lot of it rang very loud and clear in this situation. Perfect timing.
 
skc said:
I think they didn't go to shareholders because they couldn't get the prospectus out of the way in time. They probably tried placement with instos first and the price they were not happy with the price they'd get. They wanted to do an accelerated rights issue but ASIC blocked them so they needed a full prospectus. By the time they could complete that and get money in the bank, it'd be well after Xmas - but their cash crunch is now.

It's a positive outcome against what was worst feared. The fact that it was rumoured to be dead (as explained by the 90% fall today) vs a completely different outcome where the banks supported the company with a warrant deal. It's a massive difference.

At 70c it is only worth $60m... so ~1.5x pro-forma EBITDA of $45-50m (if one chooses to believe that). Total debt is $60m (by the looks) so it's about 1.5x EBITDA as well. So while not nearly as pretty as before (and probably not ideal shape going into a mining capex cliff), a market cap settling at around $100m is not at all unreasonable.
Click to expand...

I don’t think they will get through without recapitalising at some stage. They could have still gone ahead with the prospectus and arranged some bridging finance – surely that would have cost less than giving away 13% of the company at 1 cent to ANZ IF they survive and without addressing the longer term recapitalisation issue.

What they have done only makes sense if they don’t have to recapitalise – and I just can’t see that as a prudent gamble given where investment spending seems to be going.

I have owned shares in this company at another stage of the resource investment cycle and kept an eye on them since (in preparation for some far distant return of a new investment cycle) – that is up until now where I have lost interest at any price or cycle point - until management changes.

Hope you continue to make a killing on the short term uncertainty that people thinking like me have with this company

Cheers.
 
I thought I was seeing things this morning. Forge at 30c!,when I couldn't find news of a stock split of some kind
I jumped on,then bailed out when it slowd at 49c.Quickfire profit but wish I had stayed on till later like some of you.
 
craft said:
Hope you continue to make a killing on the short term uncertainty that people thinking like me have with this company
Click to expand...

Had you been holding I doubt you'd throw it out on open at <40c. There's nothing great about the industry or the company... but your average insto fund manager just seems to like dumping things with a passion, often unnecessarily.

As to short term trading... FGE was suspended for 3 weeks and it gave everyone plenty of time to prepare a trading plan for various scenarios that might unfold, how much size you would put on etc. It's not just about waking up early in front of the screen and buying a "bargain".
 
I remember commenting earlier in the thread that I was concerned about forge group's liquidity but thought if everything went well throughout September we should be right. I therefore bought in October for the average price of approximately $5.30. Today I bought in for 40% of my initial buy in for October at the average price of 31 cents. This puts my overall average buy price at $1.03. At this point I am holding.

I think if Roy Hill goes ahead, which I think it will even if there is a delay, FGE will have a sizable contract to make up the shortfall. The value of FGE is in its future contracts. I think their current order book and potential future order book are worth a lot more than 30 cents. It's interesting to me people chose to escape that low. If this is just a once off, and it should be (the contracts were inherited by acquisition btw too, not tendered by forge), we should be ok. I think we can expect above $1 in FY2014. I expect once the FY2014 results are out the share price will dip when people realise they were serious about the loss. I also expect it will dip slightly when people get upset about not getting a dividend. I think it will recover once good news about Roy Hill comes through that confirms it's definitely going ahead. That will be when it's confirmed when Roy Hill gains the rest of the funding it needs. However, it looks good right now and given only partly paid shares into Roy Hill and the equity that's been put up so far, it has enough money to keep going. At any rate, Samsung is liable to Forge Group to pay for work Forge Group carries out even if Roy Hill does have its own problems later on.

The future is uncertain but it's about putting the odds in your favour. I hope forge group gets some successful tenders coming through so we can see some good news and help ease the minds of ANZ so they don't put any undue pressure on Forge.
 
skc said:
As to short term trading... FGE was suspended for 3 weeks and it gave everyone plenty of time to prepare a trading plan for various scenarios that might unfold, how much size you would put on etc. It's not just about waking up early in front of the screen and buying a "bargain".
Click to expand...

I wasn't insinuating you were just trading it off the cuff and I sincerely hope you capitalise on the volatility. I have no issue with trading it short term. Just expressing my opinion that I don't like managements actions from my long term perspective.

I hope people don't buy for a long term hold simply based on the presumption that it must be a bargain because of the size of the fall.

skc said:
Had you been holding I doubt you'd throw it out on open at <40c. There's nothing great about the industry or the company... but your average insto fund manager just seems to like dumping things with a passion, often unnecessarily..
Click to expand...

If I was in I would want out - the only question is price - that's why I think there could be selling to come. But the turnover is huge - Interesting to see over the next few days who's in, who's out and how much is just getting shaken all about.
 

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