The stapled securities of former Toll holdings associate Asciano Group were put in a trading halt this morning after they plunged by nearly 60% in early trading.

The securities opened at $1.28 and quickly fell to a low of 63.5 cents, before rising slightly to 69 cents when the halt was granted at 10.42 am. They were down 59% at that stage.

The company asked for the halt until tomorrow but didn’t elaborate. The request came after the ASX queried the sharp fall.

The fact that there was a fall is a disgrace and raises questions about whether there was inside information.

For 42 minutes the market traded uninformed and the shares plunged. More than 6.1 million shares were traded in that time.

It’s not the first time there has been some well informed trading in these securities. The shares had a strong run up earlier this year when private equity group TPG first appeared on the scene.

Asciano is the country’s major port operator containing much of the businesses of Patrick, which Toll took over several years ago. US private equity group TPG and another investor have been sniffing around the company off and on for the past three months.

One possible explanation for the sharp, unexplained fall is that TPG has walked.

Asciano shares fell 12% on Monday and a week ago were at $2.11. Their all-time high was at $11.64 in June last year, just after the split from Toll in a demerger.

The trading halt came at Asciano’s request, pending its response to an ASX price query.

Citigroup slashed its price target to 82 cents from $6.08 today in a note to clients called “A crisis of confidence”. In the report the broker called the stock “worthless” and said a takeover is unlikely. Citi wrote in the report:

The uncertainty around the timing and the delivery of AIO’s monetisation program means that the share price volatility is likely to remain high in the near term. Together with recent >30% drop in global multiples for Ports and Rail businesses to c7x EV/ EBITDA, we advise investors to cut their losses and pull our stock rating to Sell (from Buy) with a lower TP at 9x to $0.82ps (from $6.08ps). At 7x, the stock is worthless. A takeover without the support of the Board and CEO’s blocking stake is unlikely.

Peter Fray

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