Austal reveals Asic inquiry

Austal disclosed today that the corporate regulator is investigating announcements in late 2015 and mid 2016 that triggered a sharp fall in the ship builder’s share price.

The Henderson-based company said it was assisting the investigation by the Australian Securities and Investments Commission.

The investigation relates to an update issued by Austal on December 10 2015, disclosing likely cost increases and margin pressure on its littoral combat ship program in the US.

That update sparked a 25 per cent fall in the company’s share price to about $1.70 per share.

One month later, the company announced the resignation of then-chief executive Andrew Bellamy, sparking a further slide in the share price to $1.20.

New chief executive David Singleton disclosed the nature and scale of Austal’s US problems on July 4 2016, after calling a trading halt on June 30.

Mr Singleton said Austal would need to make a significantly higher level of modifications to the ship design and cost than previously estimated, in order to meet US navy standards.  

The detailed update included the disclosure of a $156 million write-back of work in progress.

That led to further weakness in the company’s share price, which slumped to $1.08.

The company’s share price recovered during the second half of 2016 to end the year around $1.70 per share.

Its share price was unchanged today at $2.10.

Austal said today it was fully cooperating with Asic so the investigation could be completed as soon as reasonably possible.

Asic declined to comment on the inquiry today.