Ann: 2017 Half Year Results Investor Presentation, page-38

For shareholders to win big from current levels - and you'd want to win big (at least double your money or better over the next three years) given the risks involved here - three things have to happen: 1) an eventual recovery in profitability, 2) no dilutive equity raise, and 3) no more asset fire sales (and Dampier has to be one of the most mindbogglingly cheap asset sales i've seen in a long time - it was sold for <1x 2014 EBITDA!). Given that i see a low probability of all those three things transpiring, it seems like you need to get lucky to make good money from here, even from a ~$0.20 share price.

Here's broadly how i see it:

- They need to generate >$50m EBITDA (annually) just to pay the interest bill (~$20m p.a.) and keep the boats afloat given annual maintenance capex of $20-$30m p.a. This is clearly quite a ways off even under a gradual cyclical recovery, and the problem is that the vessel sale program is constantly reducing their potential profitability. Banks won't be amortized out of profits for quite a while (simply because they're nowhere near earning enough to do so), so asset sales will continue.
- Fire-selling assets at >20% EBIT yields, as they did with Dampier, to pay back debt at ~7-8% interest, crushes returns to equity (basic maths).
- Even if they manage to sell a bunch more vessels, the banks are going to want to be amortized further, because the stabilized earnings base of the business even under a cyclical recovery scenario is going to be much less than it was in 2014 post all these asset fire sales.

I said before the 1HFY17 results that MRM wasn't a good risk-adjusted play at $0.30, and i see it as an even worse play now. I believe basic maths dictates that more asset fire sales and an eventual very dilutive equity raise are still very much in the pipeline. The big issue remains that, as their market cap shrinks and shrinks, the % of MC they'll be raising to de-lever the business is going up and up, which makes the math on the equity raise extremely unpalatable - they're going to be raising >100% MC at these levels, which means the discount to market price on the equity raise is getting more and more severe.