Foraco International SA T.FAR

Level of debt

[FrozenInOntario]

Foraco is quite indebted.  From what I understand, long term debt is due next year but still they are buying a few shares on the market instead of preserving cash.   Anybody has any insight on the term and conditions of the long term debt ?  The financials do not yield a lot of detail.

Typically I would stay away, however co CEOS own almost 40% of the equity.  Therefore, it would be safe to assume that they will not dilute existing shareholders if they refinance.

Per looking at last quarter, rig utilization is at 50%.   So with all commodities on an upswing, I guess that their utilization could shoot up much higher ?   And if the market becomes tight, rates could also improve.    Any ideas as to free cash flows these guys could generate in a boom market ?

Anyway, have been niblling a bit, but seems to me that if they take care of the debt,  we could see excellent returns.

GLTA

[savyinvestor333]

I posted this on the MDI board on Jan 16. FAR price was .50 and MDI was 7.47 MDI vs FAR Anyone out there that has compared the 2 companies? I know FAR has a debt issue which they are working on but when I compare total market cap including debt of  both companies MDI (602 million) to FAR (205 million)and then compare to annual revenues and profitability (FAR around 60% of MDI). I come up

[FrozenInOntario]

Your numbers do sound right.  However, their operations are different, see the drilling for water division for Foraco.  Their geographical mix is differetn too.  This being said, Foraco could produce very interesting results for investors as they delever and we hit an upcycle with improved capacity utilisation and improved day rates. Investing on the most levered player can produce

[savyinvestor333]

I'm expecting updated progress on the debt issue on Thursday's conference call. Seems to me they think it can be redeem under par value but even if it isn't I believe we are still cheaper and better margins than MDI