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.
West Elara and West Epsilon are currently contracted with Statoil until 2016/2017 but Statoil has made clear that they have no problems cancelling out of these contracts if business conditions remain poor.
Newly build West Rigel will be delivered by mid-2015 and still needs around $300 mln in new financing commitments. If the Rosneft contract won't be executed the semi-sub will sit idle right from the start.
The West Venture contract with Statoil expires in 07/15.
The West Phoenix contract with Total expires in 09/15.
The West Alpha is contracted with Exxon until 7/16 and is designated for Rosneft after that
The West Navigator contract with Centrica Energy ends this month. The drillship is designated to start work for Rosneft in 7/2015
So without the Rosneft contract the whole fleet except for the West Alpha and with some luck the West Elara and West Epsilon will sit idle by mid-2015 including a newly build semi-sub which isn't fully financed yet.
Add another $218 mln in short term debt maturities and tell me how the company will avoid bankruptcy given this complete mess.
there's an article out on SA discussing the severe implications for NADL
Actually the percentage of the earnings beat has decreased dramatically from last quarter - from 18.5% to just 5% this time which is by far the weakest beat since the company went public. Gross margins continue to be under pressure as expected. Given what happened to CTRP I wouldn't be too optimistic for tomorrow. The company is buying growth at the expense of margins and this will continue going forward. Should growth AND margin decelerate further the shares will be toast.
whoever ends up with the brands after all is said and done current JOEZ shareholders certainly won't profit from a sale of the restructured company. The equity will either be diluted beyond recognition or completely cancelled.
ouch - plain wrong
you might remember that in bankruptcy the company does not get liquidated - it continues to do business as usual so there won't be any fire sale of assets. In fact it is pretty simple - CIT will continue their relationship with the restructured JOEZ and Garrison and other lenders will agree to a debt-for-equity swap or another type of debt restructuring. Current shareholdes will end up with nothing or close to nothing.
This will end at day lows and will only move lower going forward as they really have no choice other than to file for bankruptcy going forward - they won't get those much needed $500 mln on the market regardless of what they might offer.
no one cares about this - they need to refinance $200 mln in short term debt maturities and at least take on new debt in the range of $300 mln for more drillships they ordered. Any net asset value calculation is meaningless if cash is running out. Bankruptcy is near.
$200 mln in short term maturities and at least another $300 mln for newbuild drillships will have to be financed in 2015. And no - SDRL just floated NADL, they won't do anything to help the company.