that this company is not going to go bankrupt then at these prices the stock is absurdly cheap. I for one do not believe that bankruptcy is in the cards at all. In this case, do not listen to the share price and the so called market because it is lying. I was told by management that despite the company not getting any love in the market they are pleased with their progress and are turning around. So why the share price destruction? As contragalo posted, Fidelity dumped 18.3 million shares on the market at somewhere around 10 cents. I watched that happen on Thursday. The stock was under some pressure around 13 cents then all of a sudden right down to 10 cents and the 18 million poped out and then right back up to 12.5. Some funds simply do not want to own a stock that is trading under 20 cents so they are either dumping like was done today or as was the case with Fidelity (as they had too much stock left to just dump it. The price would have been 6 cents if they had) they found a buyer (s) for the remaining shares. They had twice this much 6-12 months ago so they have played a real serious part in the share price being systematically sold off as they likely kept feeding the bid down with large portions from time to time.
Remember that selling begets selling. Take today. if one did not know better, one would think the sky has fallen or the company was filing for bankruptcy this week so what happens......more folks panic and sell and on it goes. The company generated adjusted EBITDA of nearly $15 million last quarter (if one removes the one time costs). That is an annualized amount of $60 million and a number of analysts have their EBITDA estimated at nearly $80 million for this year. At this level of EBITDA they could very easily service their debt repayment.. Remember just one year of debt repayment (if they do not refinance) would reduce debt by over $30 million to $196 million.
I bought more today. You can be sure that Dawson and team and the BOD are working very hard to get the utilization up, the costs further reduced, the debt refinanced and the HRT arbitration behind them. Management is quite confident that they will have a new debt facility in place prior to Q4 with better terms.
All this company needs is some wins like:
- Announcement in Q2 that the aritration awarded TID $16 million from HRT
- Q2 results indicate a 85% utilizaton rate with ~$34,000 average day rate
- Announcement of the two heli-rigs being contracted at comparable rates to HRT for two years commencing in Q4
- Announcement that the debt facility has been redone at more favourable terms to reduct annual payback amount from $52 milllion to $35 million or less
And the stock price would more than triple. So yes I am down considerably in my investment but I believe the stock price is way too low based on the funds dumping and creating for fear and panic selling to the levels we are currently at.