David Wieland and David Goldberger. Photo: Jessica Shapiro
ANYONE looking to offload a crane business on to investors in the future might have a tough time thanks to the performance of two crane concerns that went public during the boom.
The two businesses are the widely held Boom Logistics and the more tightly held Verticon Group, the outfit controlled by David Goldberger and David Wieland, best known for the Direct Factory Outlets business.
Verticon has been heading south for some time and at last count its shares were fetching 1 cent, which placed a valuation on the whole box and dice — or what's left of it — of slightly more than $1 million. Debt recently was stated at about $29 million.
Debt is also the word at Boom.
Boom has fared far better than Verticon and at least still has cranes on its books. For a time it looked as though former Brambles man, Brenden Mitchell, was going to preside over a very acceptable result for the current year.
But Boom slipped into losses in the third quarter of the financial year just completed and is now suspended, with fee-hungry types looking around for money; or, as Boom put it, "capital management initiatives".
The turnaround at Boom has happened very quickly indeed. Five months ago the company was looking at "an above-budget outcome", with interim earnings higher than the previous corresponding half-year.
The company also announced the completion of a $175 million three-year revolving credit facility, a $32 million working capital bank facility and a fall in its gearing ratio.
But in May the optimism vanished. Brenden Mitchell reckoned that earnings forecasts for the June year would not be achieved due to a severe contraction in the March quarter.
On the borrowings front, last month Boom said it was reducing debt from expected tax refunds of nearly $15 million. The refunds were due to adjustments flowing from the inappropriate application of depreciating asset figures.
Dear oh dear, the business of cranes is not one for the faint hearted.
And not what was expected when Boom went public through the good offices of Bell Potter and Wilson HTM late in 2003.
The 80-cent shares went for a huge run, nearly making it up to $5 in 2006. But since then the scrip has generally been heading down, and when trading was halted last week, the shares were fetching 34 cents.
But at least there's some share price value left, unlike at Verticon, which went public one year after Boom.
Also coming out of Bell, the Verticon float was done at $1.20 a share but no one got carried away, and the shares failed to get much above the issue price.
As it has turned out, the float was a shocker. The sale of its crane and hoist division was completed a couple of months ago, which reduced debt to $29 million, and the directors said they were looking forward to focusing and growing the company's property development division and "providing value to its shareholders going forward".
Verticon has raised $54 million since going public, and with that current sharemarket value on the company at little more than $1 million, this represents an extraordinary evaporation of capital.
Boom is still standing but it is a serial devourer of money.
As well as the cash raised when it went public, there have been a series of placements and one or two other issues. If memory serves correctly, these have raised close enough to $200 million.
The market is now valuing Boom at $58 million.
So what happens now? Boom is looking for another chunk of money and the company will be hoping that an improvement in the economy will increase demand for its cranes.
As for the troubled Verticon? Well, it's got a lot of debt and not much in the way of assets. Whether Messrs Goldberger and Wieland will be able to pull a rabbit out of the hat and restore a modicum of value remains to be seen.
