Two small caps saw their shares given a whacking in yesterday’s generally solid market.
Regional Express (REX) saw its shares fall 11% after it issued a dire warning late on Friday night about its immediate outlook, and just-listed transport group, McAleese (MCP), saw its shares shaken for a second time in a week with more bad news about its troubled Cootes tanker division in NSW.
That was after the NSW roads minister Duncan Gay again ordered the transport company’s Cootes petrol tankers off the road following the discovery of fresh safety breaches.
Mr Gay said yesterday that spot checks of Cootes vehicles last week had found “major defects”.
“These random inspections uncovered significant failures,” the minister said. “This was in addition to two incidents involving Cootes vehicles late last week which presented major defects,” Mr Gay said.
McAleese’s shares slid 10c, or 9%, to a new all-time low of $1.02 after the minister’s announcement. The shares subsequently recovered a bit to end down 1.8% at $1.10.
The latest round of inspections followed a Four Corners report a week on ABC TV which raised questions about safety and maintenance of Cootes tankers, especially one that had been involved in a fatal crash at Mona Vale in northern Sydney late last year.
That crash saw the Cootes fleet inspected and grounded after numerous faults were found in trucks in several states.
McAleese shares fell 6% last Monday on early reports of what Four Corners would say. They then rebounded to $1.17 on Friday of last week, before again being sold off yesterday.
Worries about the safety of Cootes fleet of tankers saw McAleese reveal last month it had lost key haulage contracts with Shell and BP in the wake of the Mona Vale crash and the first fleet grounding.
Those two contracts covered around two thirds of of McAleese’s fuel revenues.
Another round of spot inspections of Cootes vehicles in NSW last week led to 17 vehicles ordered off the road for repairs, according to Mr Gay. “While we acknowledge there have been some improvements in the fleet, it is simply not good enough that in some cases we have seen repairs that don’t meet our standards during a second or third check.
“Despite four months of ongoing work with Cootes and the parent company McAleese, I have ordered all their NSW tankers be subject to Roads and Maritime compliance checks yet again – just as we did immediately after the Mona Vale tragedy,” Mr Gay said.
The company’s stock floated on the Australian Securities Exchange at $1.47 a share in late November, a month or so after the Mona Vale crash in October. The shares hit a high of $1.57, closed the first day on $1.50 and meandered around that level until late in January when new rumours of problems emerged and then the Four Corners investigation a week ago.
