Forge Group’s shares have nosedived after it ended a four week trading halt by announcing a debt rescue package from ANZ.

Shares in engineer and constructor Forge Group have plunged by more than 80 per cent as it revealed it had to be rescued from disaster by creditors ANZ Bank.

Shareholders jumped at the chance to dump the stock on Thursday after the company came out of a four week trading halt.

Perth based Forge Group was facing a cashflow crisis as it sought to repay debt and provide $45 million needed before the end of December to finish building two poorly performing power stations.

ANZ agreed to increase a debt facility with Forge from $11 million to $60 million, as well as waive covenants and nearly $10 million in repayments for the next nine months.

However the bank now has warrant options over 13 per cent of Forge’s issued shares, which if exercised could dilute other shares and profits.

Forge’s shares lost $3.495, or 83.6 per cent, to 68.5 cents, having earlier fallen to 28.5 cents.

The plunge wiped more than $300 million off its market value, to $59 million.

Forge gave no indication of its problems on August 29 when it forecast continued success in the 2013/14 financial year after a $63 million net profit in 2012/13.

However on Thursday it said it expected to post an earnings loss of $85 million to $90 million in 2013/14, following a $127 million profit writedown.

Poorly performing gas turbine power stations at Mt Isa in Queensland and Rio Tinto’s West Angelas power station in Western Australia are the source of the writedowns.

Forge chairman David Craig said the scale of underperformance of the two power stations had only come to light in a short space of time, which was unacceptable to the board.

Chief executive David Simpson described the outcome as regrettable and extremely disappointing, citing poor project management among a range of cost blow-out problems.

Leadership changes have been made at both power stations, with Mr Simpson to have direct oversight of both projects until their expected completion next year.

CMC Markets chief market strategist Michael McCarthy said Forge’s problems with debt were reflective of challenges being faced by the wider mining services sector.

Slowdowns in mining activity would also affect gas demand and therefore revenue from Forge Group’s power stations, he said.

However Mr Simpson pointed to the company’s contracted order book of more than $1.8 billion as reason to remain confident on its future prospects.