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14-04-2015, 07:11 PM
(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......
