Ann: Trading Update, page-18

croasian


violent agreement with you on one item - not sure which fool said it was without risk but i hate it when people misrepresent things that way. be a real mouth breather to come up with that view.

completely 180 degree opposite of what i said of course - which was the risk/.reward skew is very good - limited downside, lots of upside - and that being precisely the point at which smart investors want to start considering buying a stock.

the only thing thats supposedly risk free is bonds. and even they generally arent

but where i disagree is this

current market cap for issued shares is $101m at 27c and debt is $400m - so thats what you set against the NTA to work out breakup value for shares.

out of the money stock and options is not relevant to calculating breakup value because those dont get issued/exercised. a board trying to negotiate payment of unissued exec share allotments on a liquidation would have a v tough time getting that through - highly unlikely to occur, as they are supposed to be performance related. and its not great performance to be winding up a company.

with $501million to payback to get 100c in dollar for shareholder -and $800m in book value assets - that allows for a ~60% sale price to book value ratio - given these prices are already heavily discounted and the vessels in many cases essential to any ongoing production and maintenance - im entirely comfortable the value will be at or higher than that

the only scheme in which i dont see that happening is a further subsequent collapse in oil market back into the low 30s- 20s.

a liquidation doesnt mean you get money back tomorrow. its often 12-18 months post the event to allow for orderly sales

but the entire point was that initial capital invested in MRM shares at these prices is already highly derisked

the greater risk to my mind would be if mgt decides it can maintain a going concern - raises fresh equity to meet these debt calls - then the market subsequently falls apart.

but the whole point is that no investing is without risk.

and you also need to bear in mind that the equity replaces debt - so apart from costs of finance etc you arent changing the equation too much on asset liquidation coverage - as logn as you arne tbuying in a long way above the capital rise sp

investinh is about making smart, calculated risk/reward bets.

And there are very few on the ASX that are as significantly derisked with so much upside if the sector rights itself.

but lets go find the muppet who thinks this is no risk. maybe pay for basic education in reading and comprehension.