Shareholders Association founder Bruce Sheppard said last week that if the trading halt remained in place until today, that signalled the situation would be "pretty ugly". And the further extension of the halt adds further weight to this sentiment.
"When it's a longer trading halt the signal is 'we've done enough work to know we've got a problem, we just don't know how bad or good it is, we now need time to narrow the range of possible outcomes to the most probable outcome," he said at the time.
Gibson said that this situation has left the investment community with many questions about Fletcher Building.
She says some finance experts have suggested that Fletcher might initiate capital raising efforts, which would involve the company going back to its shareholders and asking them to put more money into the business to shore up the balance sheet and ensure that the debt to equity ratio is in line with what the banks are expecting.
"Otherwise the bankers will be unhappy because their balance sheets aren't looking good," Gibson said.
"This is a pretty bad time. We've seen the CEO leave. We've seen the head of construction Graham Darlow leave last year. And we've seen the chairman Ralph Norris say that they're going to make no profit out of the $700 million New Zealand International Convention Centre and the Christchurch Justice and Emergency Precinct."
Gibson said that the worst time to sell shares is when there is a substantial amount of bad new swirling around a business.
"There'll be a big temptation on behalf of some investors to bail, but some of the more institutional investors will hope that there's some recovery," Gibson said.
She also said it's important to remember that Fletcher employs about 18,000 people and that the building and interiors division troubled by the losses is a relatively small part of the overall business.
"This is a global business with much bigger spread than New Zealand and a lot more divisions than building and interiors."
The biggest concern for the average New Zealander will involve the impact this is likely to have on Kiwisaver accounts.
"I don't think overall Fletcher should have any direct impact on New Zealanders' retirement savings through Kiwisaver, because professional fund managers tend to limit exposure to shares in the older [age] bracket among those who want more conservative investments," Gibson said.
The wait is now on for Fletcher to make its next market announcement.
"They said they are in discussions with bankers and expect to be out of the trading halt on Wednesday," Gibson explained.
"They will be providing a market update before then, which could come at any time between now and 8.30am Wednesday morning."
