With another $130 mln in April 2015 convertible notes still outstanding and debt-for-equity conversion obviously being the preferred solution for the company the shares face substantial volatility regardless of tanker rates. Once this issue will be fully adressed I will hurry to get back into the shares but for now it isn't worth the headline risk.
Actually the latest conversion was done at very favorable conditions and still Mr. Market gives a big thumps down with the shares down 30%. Admittedly the conversions contain an incentive for the noteholders to short the shares during the VWAP period to get additional shares.
they are profiting from the oil price crash - and you can't really say that the same is true for NADL I guess :-)
There have been plenty of articles out in the meantime about even SDRL going bankrupt
The operating cash flow for FY14 might be around $150 mln - it will be much lower in FY15 with most of the fleet sitting idle starting from Q3 on. Neither debt payments nor dividends were made out of cash flow in FY14 as the company in fact added to its debt position to fulfil its obligations.
In FY15 they won't have access to new debt funding.
they just spun off the company so this would pretty much the very last SDRL would ever do
might be just tax loss selling
actually the shares already did price in a much higher amount of dilution given the October exchange price. I am perfectly fine with the company exchanging debt agains equity at a premium to market prices here
no - Frontline was quick to take advantage of the 150% share price gain and negotiated a very favorable debt for equity swap in short time.
The giant share price gains were solely due to tanker spot market rates developing favorably amidst huge demand caused by falling oil prices
Yeah - I was dead wrong about Frontline as THEY indeed will be saved by the miracle of ever falling oil prices.
But actually this is exactly what will put NADL into bankruptcy within a few months. They habe no access to the debt markets and need to raise close to $700 mln short term.
You obviously missed the fact that another $464 mln will have to be raised in 2015 to pay for their newbuild semisub - given current business conditions the company has zero access to debt markets while parent SDRL faces similar problems and therefore can't help them out.
Your existing income number does not equal free cash flows which are much lower and will only make up for a fraction of the cash needed to pay for upcoming debt maturities.
So they will have to raise close to $700 mln in 2015 to avoid bankruptcy but are effectively shut out of debt markets due to business conditions - and Seadrill can't help either. So what options does NADL have left here ?
I am taking advantage of this morning's price decline here and start scaling into the shares
conversion at almost double the October price - still $126.7 mln remaining but given the favorable conditions this should be no problem at all anymore
Yes - and there are another $210 mln in debt maturities which come up in 2015 so in fact they will have to raise $665 mln in 2015 and there's no chance to get even a fraction of that
Clearly this was just another bad report but the gross margin did improve to 10.9% qoq - no one should pay attention to your annual number. Investors should care for the current state of the business which is as murky as it has always been with decreasing backlog and huge cash burn rates.
But the gross margin is indeed slightly improved from last quarter and vastly improved yoy. It doesn't change anything but freaks like you should get banned here.
I don't think the company call was great - analysts were seemingly disappointed about the cash flow guidance for FY15 and much higher capex plans. Add some severe forex headwinds and the lower than expected outlook for Q1 and FY15 and you have all ingredients for a double digit decline in place tomorrow