rsmehta Posted August 5, 2016 Share Posted August 5, 2016 Hey guys, Has anyone done the math of how much cash would be leftover if HOS sold their entire fleet and just drew down debt and repaid their outstanding bonds?? ---------------------------------------- What does this "worst case scenario, dayrates stay suppressed for next 10 years and nobody drills in gulf" amount to? Link to comment Share on other sites More sharing options...
Okta Posted August 5, 2016 Share Posted August 5, 2016 They cannot sell all their ships in a short period of time. Those are not planes with a liquid market. Replacement cost or book value is meaningless for selling them. Even if there were a market such a fleet would warrant a huge discount. Maybe the can sell one ship at a time. The sale to the US Army was a one-off. Also the revolver does not seem to be able to use for paying the bond. As much was implied on the call, but I did not read the credit agreement. Link to comment Share on other sites More sharing options...
rsmehta Posted August 5, 2016 Share Posted August 5, 2016 What's the rational behind those ships not being so liquid?? If there are lots companies placing orders with shipbuilders for OSV's, but must certainly be a relatively fair secondary market for these OSV's as well?? ----------------------- Said another way, if day-rates stayed this way for the next 5 years, you would expect them to file for bankruptcy sometime in 2020? Link to comment Share on other sites More sharing options...
Okta Posted August 5, 2016 Share Posted August 5, 2016 Where are the companies placing orders with shipbuilders for OSV's? All want out of their contracts. What are you even talking about? HOS just takes the remaining ships because they have a contract. It was a mistake to buy the ships. It was a gamble on a better market. Now there is nothing they can do about it other than modifying the timing a little bit. Link to comment Share on other sites More sharing options...
DooDiligence Posted October 9, 2016 Share Posted October 9, 2016 ++ I work for Chouest (HOS reports on market share have us ahead of them.) Chouest is privately owned & I couldn't even guess at what's on the balance sheet (although I'd dearly love to know...) What I do know is that Chouest has a lot of infrustructure that gives us an edge over competitors. The Chouest family owns a large portion of Fourchon; in particular the C-Port loading facilities (C-Port 1, 2, 3 & 4) which undoubtedly gives our salesmen an edge in negotiating deals. The company also owns multiple shipyards including one in Navegantes, Brasil which is absolutely top notch & which allowed us to effectively penetrate Brasilian markets without getting mired in Lava Jato (Chouest operates more Brasilian flag OSV's than any other company in Brasil.) Another set of subsidiaries; C-Innovation & Marine Tech also design & build our dynamic positioning systems & bridge management & engine room automation controls. Having said all that; the marine transportation business is enormously capital intensive & although the fleets can be repurposed, there is only so much you can do with them. The past decade has seen an explosion of new builds & now that most of the contracts have run off, we're seeing intense competition for day rates. When oil imploded, I started reading extensively on everything from E&P & service companies to pipelines, refiners & retailers & came to the conclusion that I couldn't choose a single company to place my faith in, so I waffled & placed my energy bet with VDE (Vanguard Diversified Energy.) Ohhhh I know that now I've marked myself as mentally deficient & maybe a bit of a coward but what the hey, I can sleep at night (and miraculously, I bought very near the last bottom.) I still have 3 companies on my watch list & would buy if they cratered enough that it was obvious I was getting a value (OII, CLB & SLB) they may not be particularly imaginative but they're reasonably simple to understand & I like picks & shovels. My advice as a humble piece of boat trash would be to avoid HOS or any other in favor of just about anything else! Link to comment Share on other sites More sharing options...
DooDiligence Posted March 13, 2017 Share Posted March 13, 2017 $360M in cash & receivables trading for $3.54/share $21M in capex to maintain a stacked fleet of high spec vessels & probably a hundred million or so to get them working if they have to sit for the next 5 years waiting for an upturn in the industry (plus around $50M in interest expense.) Cash flow could go negative with earnings but not alarmingly so if all they do is minimally maintain the fleet & avoid further acquisitions. Debt should remain constant (who's gonna give them money?) Thoughts from anyone more astute at balance sheet & CF analysis? I haven't bought any & am also looking at Oceaneering which is in a different end of the biz... Link to comment Share on other sites More sharing options...
mjohn707 Posted March 13, 2017 Share Posted March 13, 2017 $360M in cash & receivables trading for $3.54/share $21M in capex to maintain a stacked fleet of high spec vessels & probably a hundred million or so to get them working if they have to sit for the next 5 years waiting for an upturn in the industry (plus around $50M in interest expense.) Cash flow could go negative with earnings but not alarmingly so if all they do is minimally maintain the fleet & avoid further acquisitions. Debt should remain constant (who's gonna give them money?) Thoughts from anyone more astute at balance sheet & CF analysis? I haven't bought any & am also looking at Oceaneering which is in a different end of the biz... I looked at these guys a little while back, and my impression was that their survival was a bit in question. The bonds trade for like 60% of par and I think I remember that they have some expensive ships on order that they haven't taken delivery of yet. Couldn't get it to make sense for me Link to comment Share on other sites More sharing options...
DooDiligence Posted March 13, 2017 Share Posted March 13, 2017 $360M in cash & receivables trading for $3.54/share $21M in capex to maintain a stacked fleet of high spec vessels & probably a hundred million or so to get them working if they have to sit for the next 5 years waiting for an upturn in the industry (plus around $50M in interest expense.) Cash flow could go negative with earnings but not alarmingly so if all they do is minimally maintain the fleet & avoid further acquisitions. Debt should remain constant (who's gonna give them money?) Thoughts from anyone more astute at balance sheet & CF analysis? I haven't bought any & am also looking at Oceaneering which is in a different end of the biz... I looked at these guys a little while back, and my impression was that their survival was a bit in question. The bonds trade for like 60% of par and I think I remember that they have some expensive ships on order that they haven't taken delivery of yet. Couldn't get it to make sense for me I agree on the dubious survival aspect. Until last week, I worked for a much larger privately owned competitor. I haven't looked at HOS's debt instruments & quite honestly, am not competent in this regard. I was just wondering if any of the true value guys here had an opinion. HOS (if it could survive) might be attractive at some point... Link to comment Share on other sites More sharing options...
mjohn707 Posted March 13, 2017 Share Posted March 13, 2017 $360M in cash & receivables trading for $3.54/share $21M in capex to maintain a stacked fleet of high spec vessels & probably a hundred million or so to get them working if they have to sit for the next 5 years waiting for an upturn in the industry (plus around $50M in interest expense.) Cash flow could go negative with earnings but not alarmingly so if all they do is minimally maintain the fleet & avoid further acquisitions. Debt should remain constant (who's gonna give them money?) Thoughts from anyone more astute at balance sheet & CF analysis? I haven't bought any & am also looking at Oceaneering which is in a different end of the biz... I looked at these guys a little while back, and my impression was that their survival was a bit in question. The bonds trade for like 60% of par and I think I remember that they have some expensive ships on order that they haven't taken delivery of yet. Couldn't get it to make sense for me I agree on the dubious survival aspect. Until last week, I worked for a much larger privately owned competitor. I haven't looked at HOS's debt instruments & quite honestly, am not competent in this regard. I was just wondering if any of the true value guys here had an opinion. HOS (if it could survive) might be attractive at some point... Well as they say, never ask a man if he's from Texas... Probably cheap if the equity survives intact and oil turns reasonably soon, it's all a bit hard to predict though. Marty Whitman is out of favor on COBF, but I always thought that his "safe and cheap" rule was one of the most intelligent things ever written about investing Link to comment Share on other sites More sharing options...
DooDiligence Posted March 13, 2017 Share Posted March 13, 2017 $360M in cash & receivables trading for $3.54/share $21M in capex to maintain a stacked fleet of high spec vessels & probably a hundred million or so to get them working if they have to sit for the next 5 years waiting for an upturn in the industry (plus around $50M in interest expense.) Cash flow could go negative with earnings but not alarmingly so if all they do is minimally maintain the fleet & avoid further acquisitions. Debt should remain constant (who's gonna give them money?) Thoughts from anyone more astute at balance sheet & CF analysis? I haven't bought any & am also looking at Oceaneering which is in a different end of the biz... I looked at these guys a little while back, and my impression was that their survival was a bit in question. The bonds trade for like 60% of par and I think I remember that they have some expensive ships on order that they haven't taken delivery of yet. Couldn't get it to make sense for me I agree on the dubious survival aspect. Until last week, I worked for a much larger privately owned competitor. I haven't looked at HOS's debt instruments & quite honestly, am not competent in this regard. I was just wondering if any of the true value guys here had an opinion. HOS (if it could survive) might be attractive at some point... Well as they say, never ask a man if he's from Texas... Probably cheap if the equity survives intact and oil turns reasonably soon, it's all a bit hard to predict though. Marty Whitman is out of favor on COBF, but I always thought that his "safe and cheap" rule was one of the most intelligent things ever written about investing agreed Link to comment Share on other sites More sharing options...
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