Why I'm not buying BOL, at this stage

As much as I believe that the fiscal discipline that is being forced on BOL by its bankers may have many positives (even for shareholders), the flip side of the coin, is that there is a risk that the business will exhaust itself and leave nothing on the table for shareholders.

Based on my very rough estimates, below, I don't see sufficient margin of safety.

If we assume that the business currently stands as follows:

• NTA = $0.38 per share
• Debt owing = $0.12 per share
• Operating costs (including depr) = $0.32 per share

If we further make the following (fairly conservative projections):

• depressed revenues, going forward, amount to about $150m annually, then we can expect $0.07 per share annual operating loss (amounting to a 19% annual depletion to NTA, in the first year).
• debt is paid down to the tune of $15m per year annually, and that this is achieved via monetisation of fixed assets at a loss of about 40% (amounting to a further 14% annual depletion to NTA, in the first year).

Then we can say that after 1 year, NTA's will be depleted by about 33% in the first year, leaving NTA of about $0.25 per share. If these depressed conditions persist for a further year, then NTA's will amount to little over $0.10 per share, after 2 years. One more year and it's bye bye Charlie, or a capital raising.

Of course, there will be much disagreement about my assumptions. In particular, with my projected depressed revenue figure, the fact that I have not allowed for further cost reductions, that I have have been too conservative with equipment monetisation rates (I don't believe I have been), and I have also not accounted for the fact that depreciation rates are running in excess of true maintenance capex.

All true. But by the same token, I have not allowed for the very heavy burden of any further restructuring, and the debt servicing costs.

For me, it just doesn't scream value, at this point.