Service Stream extends ASX trading suspension

Service Stream extends ASX trading suspension

The NBN contractor extends ASX trading suspension till June 24 to assess the output from the Syntheo project review

NBN contractor, Service Stream, has extended its suspended trading on the ASX as it examines the impact on its performance results from its Syntheo joint venture business with Lend Lease.

The suspension will remain in place until June 24, so it can assess the output from the Syntheo project review.

In a statement to the ASX, Service Stream said it requested voluntary suspension to provide some time to clarify a number of issues within its fixed communications segment, which may alter the company’s FY13 profit guidance to the market.

In March, Syntheo, handed back the remainder of its design and construction activities in the Northern Territory to the NBN Co.

At the time it said Syntheo will continue to work with NBN Co to complete its work in Western Australia and South Australia.

As a result, Service Stream EBITDA for the Group for FY13 is expected to be about $20 million, including a one-time charge of about $3 million associated with Syntheo’s exit from the Northern Territory and business restructuring.

It is also expecting to incur a non-cash impairment charge of $70 - $90 million in the second half of FY13.

The amount of the impairment charge will be finalised following the updating of business plans and the FY14 budget.

In May, Service Steam said due to its low EBITDA, the company breached the gearing ratio covenant under its banking facility agreements. A pending non-cash goodwill impairment charge associated with the fixed communications segment, was forecast to compromise a number of banking covenants going into FY14.

Service Stream is in discussions with its financiers, ANZ and Westpac, on these matters in conjunction with an extension of these facilities.

Service Stream said it was confident that an agreement on these matters will be reached with its financiers prior to finalising its financial statements for FY13.

Syntheo was appointed as a construction partner in 2011 for the Northern Territory and South Australia. The value of the contract was about $141 million and had the potential to be bumped up to $341 million, if it was extended for two more years.

At the time of the suspension, Service Stream was trading at $0.14.

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Tags NBNnbn coService StreamLend LeaseASX tradingSyntheo

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