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Fairpoint Group – accounts delayed, shares suspended. A fair point towards disaster?

By Steve Moore | Wednesday 28 June 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Updating towards the end of March, Fairpoint Group (FRP) stated “the audit of the 2016 results is expected to complete in April”. Towards the end of April, it then updated that results “will be announced mid-May”, then on 24th May that it then expected to announce in June. Now, the shares have been suspended as the company “will not be in a position” to publish its annual report and accounts in the six months from year-end it has under AIM rules – and it gets still worse…

In March, the company attributed a later than usual results announcement to “considerable activity” within the company, with the April and May announcements offering no update on this. We are now though told that the group is unable to sign-off the audit of its annual report and accounts as “it has been notified by its bank, AIB Group (UK) plc, that it is unwilling to provide the level of on-going support requested by the company”.

Uh oh. This follows the March update also including 2016 “statutory loss anticipated due to exceptional costs and impairment provisions” and noting net debt of £19.9 million and that “2017 will be a year of transition”.

The company states it “is currently participating in discussions with alternative providers of finance who may wish to provide support to the company's businesses”, but its negotiating position is evidently very weak indeed – without on-going support the noted financial information suggests it disaster ahoy!

This means, even if the company is able to scramble some alternative finance, a massive turnaround is required from here and until there is some financial evidence that it is able to deliver such, this would remain a gold-plated bargepole stock.

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