RE: Any Hope for this mis-managed co?Its clear that when they do release the Q4 financials, they will be in a loss position, erasing profits for the full year. Net income to end of Sep was 19 M, so an additional hit of 55-60 M is certainly disastrous.
But having said that, I am thinking that the costs would have been most significant in prior quarters, so wouldn't most of the costs for this project have been baked into the Q3 financials? They probably incurred 80-90% of the bills for this lump sum project to that point, and then paid out the remaining 10-20% in the final commissioning phase in Q4. Major equipment would have been paid for already (minus any holdback) and typically the construction costs are paid as incurred and taper off heavily at the tail end of a project.
Between 2009 year end and Q3 quarter end, their cash position dropped by about $200 M and I am guessing that some significant fraction of this would have been funding the Firebag project. Also, their liabilities are reported to have increased by $300 M but to offset this their assets increased by about $320 M. So this leaves a net improvement of the balance sheet of $20 M ( They reported equity improvement over this period of + 15 M). So the loss that they incur in Q4 will be taken evident on the revenue side, and wouldn't the cash have already been largely paid? I assume they are also due some funds in Q4 on project completion, potentially delayed for some months due to a negotiation period to close on costs.
Granted management didn't do a great job on this project; hopefully there aren't others like this one in the works, but I am tending to lean toward this as a short term buy opportunity.
Any other thoughts that are supported by some facts that I am missing?