Member Info for parkside13

Current net asset value per ord is around 138p so shares are trading at NAV which is about right given all the uncertainties. PER is very high this year and for the next couple of years with forecast eps of maybe 9c in 2014. That means the forward PER is around 24x which is very high. EV/EBITDA is 9x in 2014 which again is nothing special - ie it is high. Debt is forecast at $9.5bn which is obviously very stretched and interest cover looks flimsy. However, if they can refinance a portion of the debt then that helps cover ratios quite a bit and then they need to get all this stuff they have been, and are, building generating cashflow. So bottom line is this company does look stretched but it can work its way out if mines open, turbines start spinning and they renegotiate a portion of the debt. But anyone who thinks this thing is worth £4 anytime soon is in la la land. Having said that, if it all works it could be £2 in the next 12 months. If it doesn't it'll be materially below £1.

Yup. The equity "sliver" is going to be very volatile. If Essar's projects perform as their spreadsheets say they will (and power projects never quite do mind) then all will be well. If they don't, or half do, then the equity will bear the strain. There isn't a lot of spare cashflow which is why the refinancing is important. So we will see. As I say if you shut your eyes and come back in two years the shares will either have gone down hugely or up hugely. I doubt whether they'll be 141.5p!! It's all a bit un-analysable right now.

We will see. They have a lot of rehabilitation to do both operationally and financially. They are extremely highly leveraged and they need to get the projects online quickly to generate the cashflows to support and reduce the debt. In this context the FD's leaving is not helpful. So very geared equity and operational and financial challenges. That is why the equity is 138p. It's either worth a lot less or a lot more!!

I don't doubt this chap's credentials. I just hope this is because the previous incumbent couldn't do it not that it can't be done. Essar, in its over promising and under delivering way has told the market it is going to refinance and what the rough p&l impact is. They had better deliver that as it has been partially incorporated in its share price. I am rooting for it as i own a lot of share but Essar's executive team has patently not delivered so far and that sticks with institutional investors. If takes a long time to rehabilitate yourself.

What I am on about is you dont move an FD if you are in the middle of a refinancing. He occupies the pivotal role in the commercials and legals. You dont move someone if all is well which is partially why the shares have gone down. All the rest is guff about optimizing the assets etc. He doesnt optimize the assets he optimises the financing and reporting. The operation of the Company is optimized by the CEO and exec. Bottom line is, and please enlighten me if I am wrong, why move the pivotal individual in a refinancing. Either because he cant do it or it cant be done.

Trouble is Essar, since its IPO, has been a disaster. A series of disappointments and a huge debt mountain as a result of a rather clumsily articulated capital investment programme that has not palpibly delievered. The latest issue is the FD leaving or moving "upstairs"; right in the middle of a refinancing supposedly. Now if you are in the middle of a refinancing of $2bn (or whatever it is) you dont remove your FD unless he isn't up to it - which is possible - or it simply cant be achieved. The latter is the bigger worry. That the banks wont refinance because intrinsically the Company is overleveraged and the cashflows can't support the debt. So yes superfically Essar is interesting but it has a huge mountain to climb. It needs to evidence it can deleverage or earn a really good return on its EV, it needs to stop disappointing on newsflow, it needs to improve its accounts, which are poor, and it needs tangibly to start delivering on its capital investment programme. It will take ages to rehabilitate itself and all talk of £3 or £4 soon is nonsence. I'm a holder albeit nervous, due to the huge debt poile, the FD leaving and a management team that has palpably failed to deliver - yet.