Shares in Broadspectrum, formerly Transfield Services, are falling hard over doubts it can hold onto its long term contract to run controversial asylum seeker detention centres at Manus Island in Papua New Guinea and at the island nation of Nauru.
A short time ago, the shares were down 11% to $1.115.
The company had previously said it was the preferred tenderer for a new five-year contract for the Australian immigration detention centres it has run since 2012.
However, the Department of Immigration and Border Protection says the scope of the contract has been changed and that one other company will be asked to submit a tender.
“We believe that, because of our incumbency and strong track record in Nauru and Manus Province, we’re in a strong position to secure the new five-year contract when it is awarded later this year,” says CEO Graeme Hunt.
In an updated guidance, Broadspectrum says it expects to exceed its full year underlying EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) range of $265 million to $285 million. Broadspectrum now expects to deliver between $280 million and $300 million.
The company also says the outlook is positive with contracted revenue increasing from $2.3 billion in December to $2.8 billion in February 2016.
Broadspectrum is still recommending shareholders not accept a $715 million cash takeover offer from Ferrovial, a Spanish infrastructure company.
The company says the $1.35 per share is inadequate. Broadspectrum says an independent expert said the offer should be between $1.60 and $1.85.
Transfield changed its name to Broadspectrum after its founding family withdrew rights to use the Transfield name. The private company Transfield Holdings, owned the Belgiorno-Nettis family, wanted to distance itself from Transfield because of the detention centre contracts.
Last year the HESTA industry super fund sold its 3.5% stake in the company, then worth $23 million, because of reported human rights violations against asylum seekers at detention centres.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.