Sounds like major dysfunction to me. I'm not sure conjecture is quite accurate. Whenever a CFO leaves the company, I get nervous. Why were the shareholders blindsided by decision to do a secondary? That's disturbing. And then, why was it aborted? Was it merely the drop in stock price, or was there a more troubling reason? This lack of further explanation from management is the most troubling of all. I'm not ready to jump back in quite yet; perhaps I'm being foolish.
I see the stock returning to $12 fairly quickly, even with a bit of uncertainty as to how they will pay for the new ships. It'll likely be senior notes or a secondary offering next year. They have four new ships to be delivered in 2014 and eleven more in 2015. There shouldn't be any problem chartering any of these ships at profitable charter rates because the LPG transport sector should do fantastic over the next 5 years and beyond.
I've watched NNA do two secondary offerings this year and also issue senior notes. The stock price always recovered because the ships they have will be in demand over the coming years... just as GASS ships will be. I bought GASS yesterday at $10 (a steal) and would not even consider selling until this stock hits $14, no matter what turbulence occurs between now and then. We may find the price target moved up to $20 next year, I would not be surprised.
"We may find the price target moved up to $20 next year"
I would not be surprised either - by late 2014 I can see analysts setting one-year targets at $20 if rates cooperate, deliveries are timely and reasonable financing is lined up.
I was under the impression that the equity capital raised earlier this year was sufficient to support enough debt to fund the growth. The aborted attempt to raise more equity implies this is not true. Perhaps they tried to finance all the new orders at once and failed. Rather than finance as much as lenders would allow, they tried to raise more equity first. It seems to me that they should raise as much debt as the can now while rates are low and fund the rest later. If things go well, the stock should be higher next year so raising more equity will be cheaper and they should be able to finance the rest of the orders well before deliveries are scheduled. I look forward to management's explanation on the next call.
"they got rid of this new CFO because he wanted to do the secondary... the CFO lost a power struggle and was going in a direction not favored by the board."
When it comes to an equity offering, the CFO can't act alone. Presumably the CFO is accountable to the CEO who is accountable to the board of directors. The board must approve an equity offering. Looks like they all changed their minds after the stock tanked and made the offering unattractive. The CFO made a bad recommendation and appropriately got the boot.
I think the stock is a very good bet under $10 and am not surprised to see support there today. However, I still think this messy episode will be a drag on the stock until management clarifies its capital plans. They said on the last call that bank financing should be lined up soon and then tried to sell more stock for the second time this year. Understandably this should be candidly addressed on the next call.