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Ultrapetrol (Bahamas) Ltd. Message Board

  • bonkthegrups bonkthegrups Mar 23, 2012 9:08 AM Flag

    ULTR thoughts

    Don't worry Elle - I was just tweaking CreamCream's nose who was attacking me for my correct FGP call (e.g. read what he was saying about my mother along with the other foul language).

    ULTR is interesting (I am not short) - the big problem I see is the leverage at about 9-10X EBITDA. The maturity schedule isn't too bad but one must really hope for a recovery in EBITDA in an a very significant way for the equity to recover.

    I think there may be more value in the 2014 bonds with a 12% yield, and have a secured mortgage on the boats.

    Baltic Dry is in the tank and is likely to stay there but it doesn't seem like they have a lot on that end. Some have suggested PSV contracts will rollover at higher prices - I'd like to see some evidence of that, along with the barge business.

    I looked around at deck barge pricing in the second hand market. Wide range but there seemed to be a cluster in the $200-$300 per dwt range wich would put ULTR's fleet in the $200M to $300M value range - not too far from book which I think is around $300M.

    My sense is the stock must be treated as a call option - sized as very small piece of a diversified portfolio. Not my style but I'm going to look into the bonds.

    If someone can convince me of massive upside pricing in barges and PSV I'd consider the stock.

    Not a good short though at this time - if they were close to debt maturities it might be. E.g. with secured bonds yielding 12% if they have to refinance all of their debt at that rate the interest wwould be more than EBITDA. So as a long you are betting on a recovery. Perhaps someone could lay out the bull case with some evidence.

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