I feel a downgrade coming on for the shares of McAleese Transport (MCL), the owner of the troubled Cootes’ fuel tanker business. Trading in the shares was halted late yesterday after the company warned it was reviewing its 2014 results and forecasts.
The shares, which were trading around $1.10 at the time, are certain to go lower when the company updates the market at the start of next week.
Trading was stopped after McAleese said it was re-examining the outlook for its Cootes business after recently losing key transportation contracts with Shell and BP. (Two thirds of the business in the Cootes division, according to media reports.)
“The company has progressed its review of the timing and impacts of restructuring the Cootes transport business and is in the process of reviewing its fiscal 2014 forecast in light of trading conditions in January,” the company said.
McAleese said it expected to update the market by Monday morning.
The trading update and market halt follows the news this week that some of the company’s Cootes petrol tankers were taken off the roads by the NSW Government for further inspections after more problems in some trucks were found by inspectors last week.
It is the third time the Cootes tankers have been taken off the road for a break because of safety concerns.
The latest followed a Four Corners report 10 days ago which revealed problems in the petrol tanker involved in a fatal crash at Mona Vale in northern Sydney late last year.
McAleese has defended its Cootes business and the way it handled the disclosure of the losses of the BP and Shell contracts.
The surprise loss of Cootes contracts with Shell and BP, announced on January 30, wiped 29% from the value of the company (which is more than the Mona Vale crash and the continuing problems with the Cootes tankers has managed to do).
The tone of the statement isn’t encouraging, so a big change in forecasts is on the cards. And that usually means a big fall in the share price.
