(26-03-2015, 09:57 AM)AQ. Wrote: [ -> ]The good thing abt history, is that it repeats itself; the bad thing abt history, is that people thinking it's boring and dismiss it.
The oil upheaval has created one more addition to the "lessons from having high debt load" case studies, with Swiber looking as a prime example. Business cycles are tough enough - gets even tougher when one is at the mercy of rating agencies, debt vultures etc. Below is the excerpt from a LimTan report:
"Given the continued weakness in oil prices, it is commendable that Swiber can conƟ nue to garner new contracts from repeat customers. Notwithstanding this, we believe its share price may not be re-rated on a sustainable basis given continued concerns over its weak fi nancial position. This is especially so given that its S$95mln 6.25% bond is coming due on 8 June’15 and another S$305mln bond coming due in mid-2016. Despite having raised $45.9mln from its recently concluded 1 for 2 rights issue at 15 cents a share, its debt of $1.167bln is hugely in excess of its cash holdings of $167mln.
Not helping matters is the fact that its 2017 7.125% bonds saw its coupon rate surge from 6.6% in Nov’14 to 15.9% last week, effectively shutting the company out of debt markets. While a company spoke person told Business Times that the company was confident to meet their financial obligations when it comes due, the debt market suggests otherwise. Swiber’s distressed financial position is reflected in that fact that its share price is currently trading at close to 90% discount to its net asset value."
Swissco ($0.465) Be greedy when others are fear......
as a matter of fact... Swiber is one company that no reputable marine financiers dare to loan money to. The other one is Otto.
(14-04-2015, 07:59 PM)EFG Wrote: [ -> ]as a matter of fact... Swiber is one company that no reputable marine financiers dare to loan money to. The other one is Otto.
Paul getty's one impt principle. That is, dont invest in companies we dont understand. @@ what held me back from picking up the stock was this exact principle. Be fearful when others are fearful n be very fearful indeed.
http://infopub.sgx.com/FileOpen/Swiber%2...eID=341914
Looking back at Swiber FY14 results, I can only describe it as horrible and in a terribly bad shape.
Numbers in US$'000
Bank borrowings (NTFS 16) 352,470
Notes payables (NTFS 17) 638,260
Finance lease (NTFS 19) 175,231
Total debts 1,165,961
Equity (incl. NCI) 653,325
Debt to Equity 1.78x
Revenue - decreased 30%
COS - decreased 18.4%
GP - decreased 90%
GPM @ 2.4% (FY13: 16.4%)
It is highly leveraged and added on with poor profitability. COS with more components of fixed nature unable to fall in a highly correlated manner with revenue. GP was a miserable 2.4%.
Noted NTFS 28, if without the gain in disposal of subsidiary at 96,831, Swiber will be loss making for the year.
All is not lost yet, it have been successful in winning contracts recently, hope its efficient and smooth execution of the projects will be able to turn its fortunes around in FY15.
My humble view:
I think Swiber have a history of having costs overrun (hope my memory serves me right). To execute those projects, is Swiber overstretching its resources and does it have the resources to complete it - or does it have to resort to more financing? What is the profit margin? It may be a good thing to win contracts but if you manage it badly, it will be disastrous and Swiber is better off not getting the contract. And truly, I was invested in Swiber for a while then I realised "who am I kidding, this company is too big for me to understand!" As of now, I see Swiber will have problems raising more capitals in the future.
True, costs overruns are generally the killer for most construction companies.
why are they redeeming a 9.75% perpetual when they could buy on the market their own securities yielding twice that coupon ?