A spark of life in the listed securities of property investor and funds manager, Valad Property Group after it delivered mixed news for investors, especially about prospects in 2009.
In a statement to the ASX Valad withdrew its earnings guidance for 2009 of 7c to 9c per stapled security given in August as a result of "unprecedented deterioration" in the financial markets.
"The Valad Board is not comfortable providing a forecast to the market until there is more stability in the markets within which it operates," the company said in its statement.
Basically, the company’s saying it can’t give any assurances about the next year, thanks to the intense volatility and fragile confidence in markets.
It was news that the market liked initially, sending the securities up to a high of 15.5c (up 87%!), before selling took them back to be up 1.2c at 9.5c, a rise of 14.4%. They touched an all time low of 8.3 cents before bouncing a touch at the end.
Valad had been expecting fiscal 2009 net profit to range between $115 million and $145 million and distributions per security of 5.25% to 6.75%.
The group has cancelled the interim distribution, which was to be paid in February of next year.
And it will also assess the payment of a final distribution, payable August 2009.
Valad last week reported that receivers had been appointed to three projects owned by Petrac, a Valad Capital Services (VCS) customer.
This led to a fall in Valad’s market capitalisation of about $200 million due to concerns relating to the Group’s VCS business. Valad units fell from 26c at close on October 7 to 8.3c at close last Friday, October 10.
"Although Valad is witnessing a degree of difficulty in some of its VCS positions due to falling development property prices, Valad believes the impact of any such difficulties will be significantly less than last Thursday’s market response," the company said in its statement.
After write-downs and loses, Valad posted a net loss of $248 million for the year to June 30, 2008, compared with 2007’s net profit of $109.1 million.
The news will be of interest to the Legg Mason funds management group of the US which has boosted its stake in Valad to 6.52% from 5.38% in mid September, by the purchase of more than 18 million extra securities.
Valad said in its statement to the ASX yesterday:
"On Thursday 9 October 2008, Valad announced that receivers had been appointed to three projects owned by Petrac, a Valad Capital Services (VCS) customer.
"There ensued a fall in VPG’s market capitalisation of approximately $200 million apparently due to concerns relating to the Group’s VCS business.
"Currently, Valad has approximately $600 million of drawn commitments in VCS. The majority of VCS commitments are in preference to sponsors’ equity and typically supported by first or second mortgage positions.
"Although Valad is witnessing a degree of difficulty in some of its VCS positions due to falling development property prices, Valid believes the impact of any such difficulties will be significantly less than last Thursday’s market response.
Valad confirms:
Valad has no material debt expiring in FY09, and sufficient cash on deposit to cover all business and debt commitments in FY09; Valad is not in breach of any covenants in any of its corporate debt facilities;
FY09 Earnings Guidance & Interim Distribution
As a result of the on-going unprecedented deterioration in financial and other markets, particularly over the past two weeks, the Valad Board has decided to withdraw the earnings guidance of 7 to 9 cents per stapled security given in August 2008.
The VPG Board is not comfortable providing a forecast to the market until there is more stability in the markets within which it operates.
Additionally, the Valad Board has decided to cancel the interim distribution payable in February 2009, and will assess the payment of a final distribution in August 2009, closer to that time, taking account of the then prevailing market conditions.
Staff and Directors’ trading window
Following numerous requests from staff, the Valad Board has decided to re-open the security trading window applicable to staff and Directors for "buy only" trades, from today until its next planned open period beginning 30 October 2008.
Several members of the senior management teams, as well as members of the Board have indicated their intention to purchase Valad securities during the trading window.
But while the market crash was providing opportunities for the likes of Stockland and Bradken, it complicated attempts by Suncorp Metway to sell its banking and wealth management assets.
Or, more accurately, the Federal Government’s reaction to the crash by guaranteeing all deposits in Australian financial institutions for the next three years and all wholesale market funding, has forced Suncorp to think again when its first attempt to sell the assets foundered on a lack of possible buyers. )
That drought of buyers was understandable, given the immense turmoil last week, especially on Thursday and Friday.
Call it second thoughts or taking another look, but Suncorp’s statement to the market late morning didn’t meet with applause.
The shares opened strongly, rose to a high of $10.03 and then hit a low of $8.40 on the statement, which confirmed earlier media reports that the proposed sale process was in limbo.
By the close the shares were down 6.7% or 62c at $8.65 at one stage. They closed off 22c or 2.4% at $9.05 as the overa
