Forge's baptism of fire

Forge Group has come crashing back to earth in a spectacular fireball with the stock suffering its worst pounding on record as it plunged to its lowest level since the global financial crisis.

It’s little wonder Forge Group (FGE) lost sight of two critical projects that cost shareholders dearly. The phone number for its media contact on the press release went through to St John Ambulance.

The engineering contractor can’t get a phone number right even as it tries to reassure investors that it is on top of the crisis-stricken Diamantina and Angelas power station construction projects, which are forcing the group to take a $127 million profit write-down for 2013-14.

Perhaps the telephone number was deliberate. After all, shareholders were left haemorrhaging, with the stock suffering its worst pounding on record as it plunged to its lowest level since the global financial crisis.

The stock was suspended from trade at the start of November and it resumed trading this morning, with an 80%-plus freefall to around 76 cents – its lowest since 2009.

The engineering contractor took nearly a month to hammer out a bailout financing deal with Australia and New Zealand Banking Group (ANZ), which will see shareholders massively diluted through a warrant issue that would give the lender the right to exchange the warrant for shares at just 1 cent a pop.

I’ve put in a more detailed update and recommendation at the end of my latest mining services article.

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