Given the current state of business and the medium term outlook they won't be able to access the capital markets in any way despite their urgent need of $500 mln in new financing commitments within the next few months.
Goodwill and intangible assets amount to $115 mln - so taking this out the liabilities are MUCH higher (by almost $50 mln) than the remaining "hard" assets. Clearly there will be no takeover of this ill-fated company. At first they will have to reorganize in chapter 11 to get rid of their devastating debt load and after that they might interesting for private equity or other players. But not in the current state.
It is just bankruptcy reorganization, no liquidation - the brands will survive easily but the current equity gets wiped out. That's all.
Look at APP or ZQK - they are next in line.
It doesn't take to be an embargo lawyer to come to the conclusion that executing on those contracts negotiated at oil prices above $100 simply does not make any economic sense for Rosneft currently and won't make a few months from now either. Apart from any geopolitical tensions and embargo issues Rosneft simply does not earn the money to pay for expensive arctic sea exploration currently.
conference call should be funny
I don't get you - the company announced the covenant breaches and the resulting consequences and accordingly investors are heading for the exits before they get caught in bankruptcy. The only problem here is maybe that you are still long the shares.
The delisting notice has been long awaited and they could simply do a reverse split to cure the deficit.
But it won't take until May 2015 for the company to be delisted - they have defaulted on all of their outstanding indebtness and there's no acceptable way to solve THIS problem. Given the price action I would look for a chapter 11 filing at any day now.
Look at Cal-Dive for example. Different industry, same story. And not even in bankruptcy yet.
that's how things work. I have been negative on the company for almost two years and was a sharp critic of the Hudson acquisition (wrong strategy and too expensive) without even knowing the brutal financing conditions JOEZ management agreed to. JOEZ woes are mainly self inflicted by very poor management and might be cured easily under new ownership. Anyway current investors won't profit anymore
and actually it needs no crystal ball, it rather takes just one look at the share price to know what will happen pretty soon
there won't be a buyout given the current capital structure. The company needs a substantial restructuring before investors might take a look.
yes - just $100 million in cash on the balance sheet but around $500 mln in short term obligations - how do you make up for the remaining $400 mln ? They can't access the capital markets this time like they did in FY14
Actually the company is 49% owned by South Corean conglomerate Hanwha Group which guarantees the company's debt obligations. If business conditions continue to worsen they will still have the backing of their parent company and won't need to go out of business.
That said the company doesn't look like a great investment currently but at least they don't face LDK's fate.
"currently contracted RIGS" - not "risk"
They have no cash to pay for the new semi-sub and they don't have the cash for the $218 mln in short term debt obligations. Everybody knows that the oil price won't be back to $100 within a few weeks and as long as the oil price remains low the company is unable to obtain any kind of financing or get new project awards. The Rosneft deal will be cancelled as conditions won't have improved at the new closing date. Even worse they are at risk of cancellations for currently contracted risk as shown by the Karmorneftegaz cancellation notices yesterday.
What do you think will happen to the share price if Statoil cancels their existing long term contracts tomorrow ?
JF already made very clear in the most recent past that he won't put new money to work with minority owned firms like Frontline or Seadrill.
Look at Frontline (FRO) - there's a very minor bond payment due in a few months but Frontline will have to file for CH11 or do a giant debt-for-equity swap to fulfil the obligation.
Nobody should care about past numbers resulting from lucrative but soon to expire contracts closed years ago with oil prices well above $100
Today NADL needs $500 mln for their new semi-sub and short term debt maturities and they have zero chance to raise those money. The company will have to file for bankruptcy within months or even weeks.
you need to strip out the Rosneft contracts which clearly won't be executed given business and geopolitical conditions. Most of the remaining backlog will be worked through by mid-2015 and some of that backlog might be cancelled soon by Statoil. By mid-2015 90% of the NADL fleet will sit idle.
you might imagine that the stand-by rate is a tiny fraction of the rate of an active vessel.