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20-06-2013, 01:05 PM
(This post was last modified: 20-06-2013, 01:05 PM by CY09.)
The company has $4954M of liabilities against $1587M of Equity and have valued their vessels to be $5171M on the balance sheet. But in truth, if they are pressed to sell their vessels in the current economic climate, they wont be getting $5171M. My guess is that they will get around 60% of the $5171M value. Which means the company is in negative equity. So the current book value of US$7.77 is a bit deceiving.
Also the company has more CL than CA with cash comprising around 15% of its CA. Perhaps, they should write down the fair value of their vessels as they will be able to get tax benefits from S. Korea.
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(20-06-2013, 01:05 PM)CY09 Wrote: The company has $4954M of liabilities against $1587M of Equity and have valued their vessels to be $5171M on the balance sheet. But in truth, if they are pressed to sell their vessels in the current economic climate, they wont be getting $5171M. My guess is that they will get around 60% of the $5171M value. Which means the company is in negative equity. So the current book value of US$7.77 is a bit deceiving.
Also the company has more CL than CA with cash comprising around 15% of its CA. Perhaps, they should write down the fair value of their vessels as they will be able to get tax benefits from S. Korea.
that's precisely the reason the company is asking for bankruptcy protection. a liquidation does not benefit the company at all at the moment. As a going-concern, it might survive in the longer term. After all, it has billions worth of contract with Vale and another paper pulp company.
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20-06-2013, 01:17 PM
(This post was last modified: 20-06-2013, 01:18 PM by CY09.)
So if given as an assignment, what value would one put on this company as a turnaround if it has billions of dollar of contracts?
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(20-06-2013, 01:17 PM)CY09 Wrote: So if given as an assignment, what value would one put on this company as a turnaround if it has billions of dollar of contracts?
It is hard to value it now. Very likely its equity will be wiped out.
if BDI recovers nicely and quickly, its equity might have some good upside at current price if it can stay under the protection long enough.
Still, probably, equity will be 0.
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(21-03-2011, 07:38 PM)port Wrote: market has discounted the 25 yr long term contracts it secured in 09 n 010 with vale n fibria to ship iron ore n wood pulp resp. from brazil to china.
top 3 bulkers building countries:- japan, korea, china
hv made a very serious mistake of deductive reasoning. perhaps i need to use more of inductive reasoning as we r inductive machines. :-)
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20-06-2013, 03:27 PM
(This post was last modified: 20-06-2013, 03:36 PM by freedom.)
(20-06-2013, 02:53 PM)port Wrote: (21-03-2011, 07:38 PM)port Wrote: market has discounted the 25 yr long term contracts it secured in 09 n 010 with vale n fibria to ship iron ore n wood pulp resp. from brazil to china.
top 3 bulkers building countries:- japan, korea, china
hv made a very serious mistake of deductive reasoning. perhaps i need to use more of inductive reasoning as we r inductive machines. :-)
STX Pan Ocean has revenue of more than 4 billion a year. Though these 2 contracts are huge, it is only 200 million per year. Together these 2 contracts only contribute 10% of its annual revenue.
STX Pan Ocean still depends on BDI in general.
This company is an interesting case to me as it is the first bankruptcy I encountered after I read "Margin of Safety". So please do your own due diligence and don't hold me accountable.
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(20-06-2013, 03:27 PM)freedom Wrote: (20-06-2013, 02:53 PM)port Wrote: (21-03-2011, 07:38 PM)port Wrote: market has discounted the 25 yr long term contracts it secured in 09 n 010 with vale n fibria to ship iron ore n wood pulp resp. from brazil to china.
top 3 bulkers building countries:- japan, korea, china
hv made a very serious mistake of deductive reasoning. perhaps i need to use more of inductive reasoning as we r inductive machines. :-)
STX Pan Ocean has revenue of more than 4 billion a year. Though these 2 contracts are huge, it is only 200 million per year. Together these 2 contracts only contribute 10% of its annual revenue.
STX Pan Ocean still depends on BDI in general.
This company is an interesting case to me as it is the first bankruptcy I encountered after I read "Margin of Safety". So please do your own due diligence and don't hold me accountable.
though not vested in stxpo, in future will hv to focus on both strength as well as weight of evidence.
sgx-listed omega navigation can serve as a reference as it is undergoing chapter 11.
To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton
Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis
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21-06-2013, 08:13 PM
(This post was last modified: 21-06-2013, 10:23 PM by freedom.)
correct me if I am wrong.
The only way for current equity not going to 0 is that the company will repay all its secured and unsecured liabilities in 100%. Otherwise, it will go to 0.
It means that if the current creditors does not wish to roll over their lending to the company, some other company must come in and offer the balance, or it can earn enough to pay it off(then the question will be why other creditors will permit such thing to happen).
IMO, the equity should go to 0 in most cases.
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ok, spin all the vessels off to a STX vessel-trust, and use the trust $ to make installment payments to bankers... 
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR!
4) In BULL, SELL-SELL-SELL!
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(21-06-2013, 08:23 PM)brattzz Wrote: ok, spin all the vessels off to a STX vessel-trust, and use the trust $ to make installment payments to bankers...
If the vessels were on profitable charters, STX wouldn't be in this mess in the first place.
If the vessels weren't on profitable charters, how would the Trust generate cash-flow to pay a dividend ie why would anyone buy it in the first place ?
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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