Game over. Who needs to go to Universal Studios to ride a roller coaster?
2006 IPO price was $0.355. I remember the share price hit $3.80 at some point so some people could have made 10x their money. And now - zero.
(28-07-2016, 09:51 AM)CY09 Wrote: I am interested to know how much the receivables, construction in progress (inventories) and PPE are worth when they are being liquidated. It will give us a rough guage to the value of companies's assets such as Ezion, Ezra and even Penguin
Their current stated book value is in the region of USD1.5 billion. It will take a 30% discount to the sale of these assets to wipe out equity holders (which is possible). After which, it is down to how much haircut each bondholder will take.
Also, wondering if this means now the entire staff at Ezion HQ in Singapore will be let go.
There are only a few big items on the 31 Mar 2016 balance sheet (currency: USD).
1. Cash $130m
2. Trade receivables $526m
3. Other receivables $176m current, $77m non-current
4. Investment in Associates $141m
5. PPE $678m
So what is the liquidation value of these assets?
1. Cash
Par, $130m.
2. Trade Receivables
Heavily discounted since any progress payments will be disputed as Swiber will not be able to finish the work (breach of contract). Only completed contracts have any chance of full collection, and most likely the retention sums (typically 10%) will not be paid since Swiber is unlikely to be able to provide warranty service/rectification. So a 50% blanket discount would not be unfair.
Value: $263m.
3. Other receivables
From the 2015 annual report, these are obviously working capital loans to various parties, mainly associates and joint ventures. Virtually no chance of collection. 100% impairment would be wise.
Value: Zero.
4. Investment in Associates
The 2015 annual report lists them out. Except for Vallianz, all are private companies. Virtually no chance of a sale at reasonable prices.
Vallianz is listed on SGX, so the 26.45% holding can be sold. Given the large stake in Vallianz and poor sentiment, probably a 15% discount will be needed. Vallianz' market cap is $129m, a 26.45% stake at 15% discount is $29m.
For the other associates, likely value is zero as the other shareholders are unlikely to pay meaningful amounts to take over Swiber's stakes (and share of liabilities), and 3rd parties are unlikely to buy in.
So realizable value is $29m.
5. PPE
It is not clear what the realizable value is, but since it is a distressed sale in a weak market, a 20% impairment would not be unfair.
Value: $542m.
Estimated total liquidation value: $964m.
Total Liabilities: $1,427m.
Verdict
===
In order of seniority:
Banks: Bank loans of $332m are secured against PPE, insurance payouts, earnings and trade receivables. 100% recovery.
Trade Creditors: Trade payables are $280m. 100% recovery.
Note Holders: Unsecured. $534m principal against $352m remaining after paying banks and trade creditors. Estimated 66% recovery.
Shareholders: Zero.
===
On 31 Mar 2016, cash on hand was $130m. The letters of demand as of 27 July 2016 totalled $25.9m. There should have been plenty of money on hand to make payment.
However, although there was $130m of cash, trade payables were $280m. Swiber had to collect a meaningful proportion of the $526m trade receivables, otherwise it would not be able to pay the trade creditors. Most likely, it realized that it would not be able to collect, and would therefore become insolvent. Hence, the filing for liquidation.
This is of course assuming that there was no fraud or theft going on.
As usual, YMMV.
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