RE: Dont get caught out.11 Apr 2019 03:53
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.
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