at end of FY16, if we examine its current position closely, it's actually in the black IF we allow certain generous assumptions, but only slightly red [$1.9m, not $7.9 under] if we're being way conservative as its management has done.
e.g. it made some $13M in allowance for doubtful debt. of that it had only written off $47K as unrecoverable. So with a few harsh letters or call up Joe the leg breaker, might recover some of that back within the year.
Then if we assume INPEX and other jobs also brings in the cash... its minor negative current liquidity shouldn't be much of a problem. Then there's that extra $10M from one extra ship it sold post-balance date and due to settled before end of this calender year. Every few million helps.
It's tight and you generally don't want to be in a situation like this. It sure deteriorated a fair amount since last year... but it might scrape through and not as a disaster as the market might think.
From memory, its net operating cash was $120M last year; management forecast EBITDA for FY17 to be down by, from memory, about 66%.
Using my rough and simple imagination to reduce operating cash in proportion to that EBITDA and it's expected to have net operating cash of some $50M during the coming year.
If we're dreaming, dream that it might also win a couple of extra work early enough and FY18 should start to turn things seriously around.
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The new loan conditions might not be as drastic as it appear. The bankers might have only increased the interest rates but not so much to repayment. They might have even reduced the repayment. But I haven't yet look into it closely enough. i.e. what's $450 over five years? higher than $75M.
MRM Price at posting:
26.8¢ Sentiment: Buy Disclosure: Held
