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SWS Group, Inc. Message Board

catalprod 2 posts  |  Last Activity: Oct 19, 2014 11:24 AM Member since: Jun 20, 1999
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  • A consortium consisting of Van Oord, Royal Boskalis Westminster N.V., NMDC (Abu Dhabi) and Jan de Nul (Belgium) has acquired a contract from the Suez Canal Authorities in connection with the expansion of the Suez Canal, which provides a vital shipping link between Europe and Asia. The total contract value amounts to USD 1.5 billion, with each partner entitled to an equal share of USD 375 million.

    While the consortium Dredging International NV (75%) – Great Lakes Dredge & Dock Company, LLC (25%) has been awarded the assignment to deepen and widen the western branch of the Suez Canal at Great Bitter Lake, Deversoir Reach and Kabreet Reach (lot number 6), worth 540 million USD.

    Van Oord, Royal Boskalis Westminster N.V., NMDC and Jan de Nul contract includes the construction of the parallel section of the canal with a length of approximately 50 kilometers to allow ships to simultaneously transit in two directions as well as the widening and deepening of a number of existing sections to a depth of 24 meters. The majority of the dredging activities for the canal expansion will be executed with 17 cutter suction dredgers. The project will commence in 2014 and is expected to be completed in 2015.

    The scope of works, awarded to the joint venture – Dredging International NV and Great Lakes Dredge & Dock, include the widening and deepening of the Suez Canal over a length of 25 km and until a depth of -24m. The consortium has committed to execute the works within a very short time frame in accordance with the requirements of president al-Sisi. Six cutter suction dredgers (4 DI CSD’s and 2 GLDDC CSD’s) and two hopper dredgers (DI) including some auxiliary equipment will be mobilized to perform the job. Works will start immediately.

    Sentiment: Strong Buy

  • The large drop in revenues and revenues net of brokerage fees, the significant legal and professional fees, and large operating losses have eroded the strength of our financial condition. We are managing our cash to fund our current operations through fiscal 2015. We may have to decrease our stock dividends and may make further cuts. Working capital is tight and we may have to explore other financing options if business does not increase and such financing options may not be available on favorable terms to us if at all.



    Outlook



    We are confronting a general decline in the life settlement markets and the fallout of the SEC action and the resulting private litigation. Regarding the life settlement markets, we believe that life settlements have desirable investment features that will eventually restore their attractiveness in the marketplace. We expect the supply of qualified life settlements to remain sufficient for our clients’ demand and believe the low correlation of life settlements returns to fixed-income and equity securities and their competitive rates offer an attractive alternative investment.



    Even though we were exonerated by the outcome of the SEC suit it is clear that the suit did damage to our reputation and our relationships within our licensee network and client base. We are working to rebuild confidence among our licensees and clients and to expand our client base. We continue to invest significantly in programs to develop and strengthen our relationships with new and inactive licensees. We have increased our communication with our client base, emphasizing the inherent benefits of life settlements as an asset class and the particular advantages of our settlements, which do not cap investor returns as do many of the settlements offered in the industry. We believe we are making progress in restoring the confidence and interest of our clients. We are exploring alternatives for expanding our client base, including new structures for investing in life settlements, such as the marketing of life settlements as securities. Over the last two calendar years, there have been over $112 million in payouts from our life settlement transactions.



    While we are working diligently on plans to increase business for both individual and institutional investors, our operating results for the First Half of this year are disappointing and we must do more to improve our operating results. Despite the increase in revenues, the significant legal and professional fees and the operating losses we experienced in fiscal 2014 have eroded the strength of our financial condition. We believe we have sufficient currently available working capital to fund our current operations through fiscal 2015. Our recurring operations are not currently generating sufficient cash to support operations. To supplement recurring operations, we have sold most of the settlements we held for investment. While we believe we could further support our working capital through other possible asset dispositions, borrowings or equity sales, our opportunities for generating significant cash apart from continuing operations are narrowing. We believe we must generate approximately $30 million in annual revenues to fund our operations and pay dividends, and we are working toward that end. Beginning in the Third Quarter of this year we will bill our life settlement investors for policy monitoring costs in order to recover the expenses of tracking policy premium payments and maturity payouts through the life settlement process. In addition, we are conserving our cash. We may reduce or eliminate the dividends for the remainder of fiscal 2015 and for 2016 to conserve working capital until we can realize improved operating results.

    Sentiment: Sell

SWS
7.05+0.06(+0.86%)Oct 21 4:07 PMEDT

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