Costa Group, Australia’s biggest grower and packer of fresh fruit and vegetables, is in trouble and needs five days to come to terms with the problem and hopefully reveal a solution.
After asking on Monday for its shares to be suspended until Wednesday, the company yesterday asked for that halt to be extended for an up to five more day period.
Given Costa’s track record of at least three downgrades so far in 2019, analysts think this latest update is another negative report – but the request for a further extension indicates the company’s problems go deeper than just that.
The shares are down more than 53% so far this year and closed at $3.46 last Friday.
Costa downgraded its earnings guidance in January and May, citing a range of factors including crumbly raspberries, weak demand for tomatoes, berries, avocados, and mushrooms.
And in August, when it released its half-year results, Costa said these results were “broadly in line” with its latest guidance but warned that “forecasting remains challenging with potential further downside risk”.
Costa’s one page statement on Wednesday did not make any comments about the conditions any of its crops were facing.
“The Company considers that it is appropriate that it enters into a voluntary suspension so that it can manage its continuous disclosure obligations and to avoid the market trading in CGC securities on a basis that is not reasonably informed,” Costa told the market.
The trading halt lasts up to the end of next Tuesday, October 29.
A suspension this long indicates the company and its advisors are trying to revamp the company’s finances, perhaps by sounding out its banks, major customers and biggest shareholders for some sort of long term funding deal or share issue.
