Bit of a tease isnt it. Very light on detail and no indication given when that detail may be filled in. it frustrates me when companies do this even though its likely a positive development

Finally waking up to this. Got a bit carried away accumulating too much after the MoM podcast and then there was some post about the Forge collapse which gave me second thoughts. Found an article on this which possibly puts Hutchison in the all clear that I will try and share later..

@TKQLD and @edgescape - There were a couple of founders of Forge Group, one of them was Chris Ellison's brother (Chris Ellison from MinRes), however reports are that it was after the founders left the business that the new management at FGE acquired another company that claimed to be able to build power stations and they went headlong into that and got way out of their depth, lost heaps of money and that's what sent the whole business broke. I was a FGE shareholder during part of that time - sold out before the final trading halt luckilly - so I followed it closely - and afterwards. Short version is that it wasn't the founders of Forge Group that were suspect, as it was a decent business up until they left, it was the ones that ran the show after they left that stuffed it up and sent them broke.

Might be paywalled so included a screenshot as well:

https://www.businessnews.com.au/article/Forge-management-s-epic-fail

See here for what Andrew Ellison did after he left Forge Group in 2012: https://strawman.com/forums/topic/8122

See also: Founders leaving Forge in good shape (businessnews.com.au) [27/06/2012]

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I wonder what he did next?

(5) Peter Hutchinson | LinkedIn

Resource Equipment (businessnews.com.au)

Pump, Generator & Compressor Hire | National Pump & Energy (purchased Resource Equipment Ltd)

Mareterram (businessnews.com.au)

Mareterram Limited - Sea Harvest Group (Sea Harvest Group purchased Mareterram Ltd)

PH seems to have genuine experience building up businesses and adding value, and in at least two cases (Resource Equipment and Mareterram) those businesses were acquired by other businesses at a good premium.

Ellison and Hutchinson sold out and left Forge Group back in mid-2012. The company went pear-shaped after that.

4 lessons from the collapse of Forge Group (fool.com.au) [Mike King: 17-March-2014]

Forge management’s epic fail (businessnews.com.au) [14-Feb-2014]

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Also: Investigation of Forge Group collapse underway - Australian Mining [24-Feb-2014]

Yeah, looks like the Forge collapse was after Hutchinson and Ellison left, and had nothing to do with them or anything they had done prior to leaving, and was all to do with the management direction the company took after the founders had left.

Thanks Bear77 and edgescape for the digging. I’m pretty pressed for time outside of work and being able ride on the coattails of others in places like Strawman is a great asset.

 I think in all likelihood there was nothing sinister about Peter Hutchinson and Andrew Ellison leaving Forge mid 2012. I do note that CTEC was bought under Hutchinson’s watch and according to the MF article the power stations causing the issues were part of that deal.

Now, Forge was a bit of a roll-up as is Vysarn. Buying and swallowing something that turns out bad is an inherent risk of that strategy. I believe Hutchinson got out of the lawsuit scot-free following the Forge collapse where he was named as one of the parties. (Can’t find the link for that right now). Of course, what can be proven to an acceptable level in a court isn’t always the same as what happened.

I therefore see the following possibilities:

·        Hutchinson and Ellison realised too late what acquiring CTEC might lead to and decided to get out while the going was good.

·        They intentionally bought CTEC to juice the share price before they got out (sinister, not proven whatsoever and very unlikely I may add).

·        They made an honest mistake either due to lack of due diligence, acting outside their circle of competence or just plain bad luck, but lucked out by getting out in time.

I think the latter explanation is overwhelmingly likely.  

What speaks in its favour is that Hutchinson seems to retain good contacts within the mining sector with large and credible players such as BHP and Roy Hill, both of which are/were clients of Forge/Vysarn. I doubt that these companies would spend to much time dealing with shoddy characters a second time around.

I like Vysarn and how they’ve done the M&A strategy really well so far. This is definitely something that looks like a strong suit of the current management based on their track record since Forge.

Can they make mistakes along the way? Of course, and so can any business run by the most competent, honest and well intentioned people. Unexpected, unknowable and unforeseen stuff happens all the time.

I think the Asset Management Strategy securing a JV is exciting and could be big if they can get it to work and maybe also bring along some of the bigger players in the industry – some which they seem to have good connections with, right. Even if the JVs turns out to not amount to much, I still think the business should do OK and probably represent decent value at current prices.

Our family’s portfolio is around 6-7% Vysarn btw.

I’d certainly still be weary though if the management team upped and left, maybe mostly because they are the brains behind the M&A strategy which in large parts is what Vysarn is atm and how value has been created.

I think it is understandable something could have been missed or overlooked when a company like Forge is trying to horizontally integrate into a new sector through an acquisition that they don't quite understand. In hindsight, that new management should have kept a closer eye on projects at CTEC before making another acquisition. Could have limited the damage on the company.