RE: H&W still a top high risk / high reward play25 Feb 2023 15:46
yes MV, the RI at these levels is for the birds - this article sums it up well.....extract relevant below - my read no RI needed at this stage. When the roll out is underway there will be a scramble of investors only too willing to invest further and assume that the initial shareholders will be considered favourable.
EXTRACT ...
Debt and financing
HARL recently agreed to increase its interim financing agree with Riverstone from $70 million to $100 million. It’s also negotiating with Astra Asset Management to increase its current £70 million facility to £100 million and hopes to increase this further to between £150 million and £200 million. HARL notes that ‘as the Company executes larger contracts, it believes that it is crucial to maintain a significant quantum of liquidity with a larger committed facility that can be drawn down as and when needed.’
Excitingly, the company is also formally engaged with UK Export Finance but acknowledges ‘there can be no guarantee of UKEF’s formal participation at this stage and such participation will be subject to UKEF’s own due diligence processes and formal credit committee approval.’ Given HARL’s position in delivering the FSS contract, it seems likely to me that financing will be forthcoming — but this usually takes time.
Some investors are concerned that a placing is coming. Wood recently noted that ‘key to our development and a successful transformation is having a balanced funding stack in place.’ While mentioning the current debt facilities in the same breath, this kind of terminology is unwelcome to investor ears.
However, with a £30 million market cap, a share placing on its own simply wouldn’t provide Harland & Wolff with sufficient capital to make a dent in its short-term financial needs. Of course, it cannot be ruled out, but the combination of Riverstone, Astra, Navantia, and potentially UKEF funding should be enough to start delivering on the FSS contract.
And if not, a strategic investor would make more sense.
SEEMS FAIR TO ME.
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