I firmly expect the call to be a disaster once analysts discover the capex required to bring the outdated Aventine plants to produce acceptable yields.
Rosneft working on giant oil deal with trader Trafigura - sources
Mon Mar 16, 2015 2:09pm GMT Print | Single Page [-] Text [+]
* Deal would get Swiss-based trader tenth of Russian oil exports
* Neither company commenting, but rivals sure deal is close
* Russian firm's access to credit squeezed by sanctions
By Gleb Gorodyankin and Dmitry Zhdannikov
MOSCOW/LONDON, March 16 (Reuters) - Trading house Trafigura is set to become the largest exporter of oil from Russian state-owned energy major Rosneft under a deal it is negotiating with the sanctions-hit company, industry sources told Reuters.
From April, Trafigura will start handling more than a dozen tankers or 1 million tonnes a month (240,000 barrels per day) of oil from Rosneft, over a tenth of Russia's overall oil exports, three trading sources familiar with the development told Reuters.
Rosneft and Trafigura declined to comment.
would use any strength to establish new short positions here - I don't think the company will get bought out given the weakness in its business metrics.
So you think ethanol prices are going up that much in 2015 ? I don't. The deal is negative as the claimed accretion is solely a function of ethanol pricing assumptions. If ethanol prices move down the deal will be heavily dilutive to earnings.
Even worse it will take months to work through the 17.75 million shares the company has to issue to current Aventine owners who have waited 5 years for this day to finally arrive and will sell immediately. Actually they already started hedging their positions most likely.
The biggest negative is the $135 mln in debt PEIX is assuming - if ethanol prices take another nosedive they will be pretty close to chapter 11 very soon then.
And there will be huge capex requirements to update the outdated Aventine plants to operate at acceptable margins.
Given the huge improvement in dayrates during the last few months but today the company made it quite clear that they still need more cash in order to deal with the upcoming debt maturity. Actually nobody would have imagined that they still make use of this ill-fated ATM offering. If anything they should have sold shares when the stock was pumped on fast money and traded above $5 on giant volume.
Today's news sends very poor signals to the investment community:
1) The company's cash flow obviously is coming in much weaker than anticipated
2) The convert won't be refinanced (which really should be no problem given current business conditions)
3) $2 obviously is still a good price to sell for management
4) Management doesn't care at all for shareholders
I find it hard to understand why management acts like this and therefore would advice to avoid the stock at all cost.
this is outright dumb as today's news makes it painfully clear that even contracts once mutually agreed upon are NOT safe anymore in light of current market conditions. The recent DO earnings conference call already made it quite clear that customers will re-negotiate down existing contracts or outright cancel them. Seadrill is experiencing the same issues so future revenues and cash flows are going to be severely affected. The remaining $19 bln backlog will continue to come down over time not just by work being performed but also by cancellations and price concessions on existing contracts.
no need to cover here as this will be below $1 going into the next conference call
Trafigura is using the VLCC chartering JV from Frontline and TI
With the aggregate purchase price not to exceed $2.5 mln current annual revenues of the company will be somewhere between $0 and $500k at the very best. Given these numbers the company simply CAN'T be profitable or we must assume that their people work for free and there are no other costs associated with doing the business (which business by the way - there's zero reference to the company in the whole internet).
Anyway even if the company does miraculously earn a profit how can this be "very accretive" to the earnings of a company the size of Supercom ?
Things don't add up here once again.
there's no way they would have been able to eliminate that much debt from their cash flows within two years but the Valero deal might have contributed to the debt decline.
not really - I have been around for 15 years and will stay here even longer I guess
Here we go:
Fortinet downgraded to Sector Perform from Outperform at Pacific Crest
Brokers report Frontline has fixed its 318,000-dwt Front Century (built 1998) to Clearlake for 12 months storage. The rate is said to be $42,500 per day for the 17-year-old tanker. TradeWinds understands the deal is not finalised yet. Earlier this week Frontline's 309,000-dwt Front Falcon (built 2002) was fixed by Litasco at $55,000 per day for six months storage. Frontline management chief executive Robert Hvide Macleod confirmed that deal and suggested further contracts were a possibility. “I think storage will be a bullish factor for VLCC’s in 2015. We see 15 [deals] done so far and another 15 to 20 more on subjects,” he said in an email on Thursday.
Decidedly positive this time. While the very slight discount already reflects market expectations for a full redemption of the convert it is interesting to see that they did not try to do another debt-for-equity-swap.
The open market buyback also signals that the company will redeem the bond in full when it matures in April. Given the current market price of the bond it looks doubtful that the remaining holders would accept any kind of equity swap so most likely there WON'T be any further dilution from this issue.
actually the second part of the press release seems even more meaningful to me:
"in addition, the Company was able to purchase stock in open market transactions in excess of $10 million in principal amount during the open trading window pursuant to its previously announced buyback authorization. The Company also established a 10b5-1 plan to remain in effect during the closed trading window associated with the closing of the fourth quarter. All specific details of the Company's buyback activity and management purchases going forward will be reported on its regular quarterly financial reports."
Guidance was indeed weak and well below estimates - analysts were pretty straightforward about their disappointment on the call. Goldman Sachs already downgraded this morning.
I didn't like managements' manner on the call lamenting about low visibility with almost half of the quarter already done. The shares should be avoided.
that's just plain dumb - the company has shown for many quarters in a row that there's little to no value in the business.
Revenues are growing but margins came down even further when normalizing for inventory write-offs. Management promised margins to move up next quarter as well as revenues to come in in-line with expectations but this most likely still won't be enough to reach break-even results. The company's cash needs for working capital inceases continue to be extraordinarily high and this won't stop in 2015 as management pointed out.
Even worse managment did not commit to ongoing sequential revenue growth in 2015 so there won't be any chance for profitability this year.
With poor margins, high cash consumption and no viable path to profitability the shares remain a sell here.