Time to off-load this Mermaid, page-72

Hi Yellow Fin, good to hear from you.

With respect in relation to Tidewater I think the reason was more to do with short position reversal.

I'm no expert on shorts but I understand shorters don't like companies that may actually hit administration as they can't close their position by buying back stock.

Tidewater, TDW, recently got to somewhere near a stock price of one 50th of what it's stock price appears on the trading floor of Lehman Brothers post the Lehman crash, if you watch closely, in the movie the Big Short.

Today, MRM is on the knifes edge of administration and clearly has a debt repayment schedule it can't handle. I think MRM might actually get through the December payment but after this I really think the directors need to ask themselves how the heck they think this thing is solvent. And I think they might be pretty aware of the solvency question and I'm sure it doesn't help them sleep at night..

I agree with others that the required amount is about $150m in cash.

I disagree with your comment that $60 oil would make a difference. The offshore support business is nothing other than massively over supplied. The industry still expects day rates and utilisation to go down for at least the next two years. We see that commentary consistently from other people in the industry such as Transocean the large oil rig company (has an Ok balance sheet BTW) and similar companies to MRM such as Gulfmark Offshore.

I suspect that in the next year or so would see average revenue in the industry decrease as old contracts run off and new contracts, if they can be found, are at cheaper rates. The only saviour MRM may have is the now rather long in the tooth Inpex contracts which were originally agreed in happier times. The start of these contracts however have been delayed and delayed..

The wider service provider industry from what I understand from earnings calls expects that any recovery to dayrates and utlisation is at earliest 2019 and most likely 2020.

Nonetheless I expect operating cash flows, after interest, in the next 2 to 3 years to be no better than cash costs. No allowances made for depreciation or any return on shareholders equity.

Given MRM is at best cash flow neutral on an after interest basis, they need about $150m cash just to survive the debt repayment schedule.

My back of the envelope calculation suggests boats are worth about half of what they are valuing them at the moment. So in rough maths terms the boats they value at say 900 million and I value at 450 million. Happy to be proven wrong on that but I don't think anyone can.

That therefore means that in very rough maths terms that MRM have to sell in the order of half of their boats by value just to make the replacements in the next couple years.

Other option that no one is talking about us selling the real estate. Maybe this is a better option.

It's pretty messy.. A cap raising maybe the least ugly solution here. Or sell the supply base...