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Most trades are for 13.00 this afternoon indicating buys.
Dont get caught out. There is still "tree shaking" going on. Hold is my opinion if you own, buy is my opinion if you don't.
There were over 1/2 million shares bought in the last week and we get a drop? IDHK. Just realise you will have to wait until the summer to get full perspective and everything behind the scenes shaking itself out.
Have the company considered selling any vessels at any point? Obviously it would reduce their profitability in the long term but it would help with the debt, which I think is a much more pressing matter at the moment. There presumably won't be a long term if they can't get it sorted.
I think it is what Seafox did. They sold a percentage of some vessels. They have a finger in the pie still. In more than one place too (as with GMS). They could still buy more, 18pps is mighty cheap tbh.
The GMS vessels are nearly new (most) so selling them would screw themselves more long term if they can work through this tough period.
People forget, the SP dived on the news of the banking problem.
It is as if that's still a problem.
There is now work.
The fact is, transport costs increased as the work is more spread out. If contracts are near each other the transport cost reduce obviously. The market for work picking up allows for more choice of "where next" and reducing transport costs.
Some of those bills are paid for by GMS and then collected when the contractor actually pays.
Perhaps those bills can be "arranged" by the syndicate to be interest free in the new deal? At the moment GMS were still owed over 5 million from the last year on transport costs alone. It increased from 30 to 50 million.iirc So you see, less work available can mean more movement costs believe it or not!
GMS keep there vessels in tip top condition, something that helps with lost production, they have a very good reputation, I was told by someone who works in offshore environment that food quality and vessel quality are the massively big variables. Some vessels are wrecks, some food on the vessels is really bad, it would not be your first choice to eat there.
They could (with staff) cut down on food quality and save, if this would be popular is another matter, but cutting vessel maintenance costs can be a false economy. Breakdowns cost in a big way. Perhaps these were some savings Seafox were willing to implement that GMS were not? IDOK. They were looking at 15 to 20 million in savings?
I firmly believe new financing deals that are being worked on with the syndicate (6 banks as far as I am aware) will take into account the short term problem of working through a lean period, the work being more spread out, they're no fools, the syndicate information and the new CFO coming out in the summer along with more money coming in from the increased utilisation (yet to have a full effect in Aprils results as far as I am aware) should add a slightly rosier picture.
Dont get me wrong. The days of 220 million+ turnover aren't there now, but they WILL never be there again if they sell vessels.
Besides, the GMS vessels are more modified than the competitors as far as I am aware and more adaptable as a result. That would have the added negative of reducing the possible work available, such as Seafox selling a portion of its barge and it being in work on a windfarm right NOW. Its other barge that could get that work cannot get that contract.
Swings and roundabouts some days. Selling a vessel can be a double edged sword.
135 million turnover is a good number to be above, we are at 123 million iirc.
I dont see it as broken.
Just needing a poke or a tweek to get it ba
Agree with TT but also why I don’t think the debt should be so f ing onerous for the banks due to the value of our assets. Mental sp to be honest just does not reflect it’s true value .......
Pbody, the problem is that they have a lot of debt which costs a lot to service.
So at the moment they are working for the banks, not the shareholders.
They need things to pick up so that they can pay down the debt or someone to take on the debt with a longer term view.
Even if the fleet is reasonably new, in a fire sale it would not reach book value.
That is why the price is where it is.
I suppose the thing is is that I'm not invested in the 220 million turnover GMS, I'm invested in the present day GMS and I'd rather it was safe in the harbour during the storm. I want them to sort their debt out and recover with the market; they may not get back to the soaring heights of yesteryear but at least they would still be able to operate and hopefully grow again in time. I suppose another problem is there is no guarantee of a buyer if the whole sector is in the same boat and on the rocks. Apologies for all naval idioms.
So many puns there I lost count there!
Debt servicing is important. GMS are (as i'm sure you know) in the middle of reorganising their debts and finances.
They are in talks with a banking syndicate (made up of 6 middle east banks) iirc.
At the moment, there are offerings of 1.5% fixed for 2 years and then 4.5% on mortgages, perhaps these (or better levels) can be applied by the syndicate?
That would help.
With the work level that's there at the moment (123million turnover)that would have been 220 million a few years back.
I know you want here and now. GMS needs to be seen 5 years down the road. In 5 years that same workload will be worth 220 million again (if not more). This last year was a small loss, but it so could have easily been a profit.
If the 5 million in transport were in the bank, the 2 or 3 million extra from exchange rates went our way.
Adds 8 million to the books.
I know its all if's and but's.
However I would think twice before looking at it like Seafox, where they sold equipment and can not recover their lost earnings.
Debt servicing is important, lower interest rates would seriously help if they can be negotiated, dont forget, they didn't break their banking covenants, they met them.
This is where the SP drop came from.
Its like some people see its the last nail in the coffin?
The SP is where it is because of a stalled recovery.
The SP was low 30's before mention of banking covenants.
People still have that panic in there.
The covenants are taken care of and may (probably will) be improved upon in the coming months.
Seafox has a lot to do with a SP being where it is, it was 22pps dropping back to 18pps on their news release.
It hasn't recovered since IMHO.
The SP will move on good news and/or possibly some director buy ins.
Dont get me wrong NED I would like there to be no debt, but less vessels is less earning potential (over 25 or 30 year lifespan) and that is a balance and part of business that you have to figure you can work through I am guessing.
Seafox tried that method (of selling their vessels) and bought into GMS with it!
What does that say to you!
We will have to see what the syndicate can work out along with Mo B over the next 5 years to give GMS that edge in a colder paying world.
That may well be the key to unlocking true potential here long term.
Until the day rates return closer to normal.
That and a bit of "adjusted" accounting to go from a 5 million loss to a 5 million profit.
Don't forget there only JUST making a loss this last year. Its coming back toward profit as the turnover increases.
My last word is this.
Dont Panic about debt at the moment (it is there and DYOR is my opinion to new readers, the loans and finances are being renegotiated), if you do and sell you could well be falling out of a shaken tree.
Back to the topic originally stated earlier this week.
At the risk of repeating my self, the banking covenants are met.
The real reason the SP dropped from 33p.