The worst performer on the S&P/ASX 200 index on Tuesday has been the NRW Holdings Limited (ASX: NWH) share price.
This morning the shares of the contract services provider to the resources and infrastructure sectors fell over 14% to $2.35 following the release of a market update.
What was in the update?
This morning the company noted that FTI Consulting has been appointed as the voluntary administrators to troubled gold miner Gascoyne Resources Ltd (ASX: GCY). NRW is currently providing drill and blast and mining services to Gascoyne Resources.
According to the release, at this stage FTI Consulting intends to continue operating Gascoyne Resources on a business as usual basis while recapitalisation options are explored. NRW will be paid for all the works undertaken during this period.
Management advised that it had been expecting EBITDA for FY 2019 of between $140 million and $145 million before the appointment of administrators to Gascoyne Resources, but this now looks set to be impacted by its collapse.
It said: "NRW's assessment of the current exposure to the Gascoyne contract is circa $35 million representing working capital, a second-ranking secured loan of $10 million and equity in Gascoyne of about $4.3 million."
Adding: "The resulting net cash movement in the second half of FY19 is estimated at circa $8 million, as most of the working capital (circa $17 million) and secured debt exposure ($10 million) was incurred in the first half of FY19."
However, management doesn't expect this to hold the company back in FY 2020. Thanks to a series of contract awards, NRW is expected to deliver full year revenues of ~$1.5 billion next year.
Jules Pemberton, managing director and CEO, said "Whilst we are clearly disappointed with the recent events at Gascoyne, we remain positive on the outlook for NRW. In addition, with key resources, both workforce and equipment, currently in high demand we remain confident that our personnel and equipment at Gascoyne's Dalgaranga Project can be easily redeployed in the event a recapitalisation is unsuccessful."
Also falling heavily on the ASX 200 on Tuesday are Bravura Solutions Ltd (ASX: BVS) and Syrah Resources Ltd (ASX: SYR) shares with 8% and 5.5% declines, respectively, on Tuesday.
