Investment specialists are even more concerned about NZX giant Fletcher Building after it sought a trading halt extension this morning, cancelled a 10am press conference, said it was talking to financiers and reiterated it could be in breach of banking covenants.

Mark Lister, head of private wealth research at Craigs Investment Partners, said the construction company, which has a market capitalisation of $5.1 billion, might embark on a capital-raising exercise to appease its bankers after it flagged further construction division losses on Thursday.

"The worst case scenario we might see is having to raise capital. Shareholders might be asked to put money into the company, which would mean the share price comes down. Fletcher might have to do a rights issue, so shareholders might have to tip some money in. That's the worst it could get to," Lister said this morning.

Salt Funds Management managing director Matt Goodson said this morning's announcements might show a potentially complex situation.


"Today's delay is a little concerning. It shows that finalising the write-downs is more complex than first thought.

"It might also suggest that the complexity of Fletcher Building's different debt layers is requiring some time to get the different debt investors on the same page as regards a waiver and just what the 'price' of that waiver might be – whether it is merely higher interest costs at one of the spectrum or an equity raising at the other.

"Remember, though, the breach is largely a one-off in that they are taking the great bulk of the hit from the construction issues in the 2018 financial year and they should return to compliance in the 2019 year, barring a sharp downturn in their wider business operations," Goodson said.

The company this morning refused to comment on Lister's prediction of a capital-raising prospect saying it was in a trading halt so could issue no statements.

Fletcher, which has debt of just over $2b, announced at 8.40am it was cancelling its media briefing, saying it had "commenced discussions with its lenders in relation to the expected covenant breaches."

It requested a further trading halt from the NZX and suspension of trading on the ASX until Wednesday "prior to which it will provide to the market an update of its review and the status of its discussions with its lenders".

Lister believes the company would have been in discussion with its bankers during the weekend "and working on this pretty hard. It's not a great look for the company," he said of this morning's announcements.

Read more: Fletcher Building trading halt extended

Fletcher's main bankers are the ANZ Bank New Zealand, Hongkong and Shanghai Banking Corp and Westpac Banking Corp. Other members of its existing syndicate are the Bank of Tokyo-Mitsubishi UFJ, Bank of New Zealand, Commonwealth Bank of Australia and Citibank.

Lister said the investment community would have been "unnerved" by today's announcements.

"It's another unwanted piece of bad news from the company's perspective."

Fletcher chairman Ralph Norris said late last year the business would make no profit from building Auckland's International Convention Centre or Christchurch's Justice Precinct and had not expected to win both projects.

Speaking after the company's annual meeting where the board was questioned by shareholders, including former Shareholders Association chairman Bruce Sheppard dressed as a priest, Norris delivered the bad news.

"We will not be making any profit or margin [from the convention centre]. The same is true from the Justice Precinct."

Norris said later, during a conference call with analysts, the company had not expected to win both contracts.

Fletcher said this morning: "The current expectation of the board is that there will be further material losses in the Building and Interiors business beyond what was provided for in October 2017 and that once those further losses are determined and provided for, this will result in a breach of one or more of the covenants in the group's financing arrangements."