Well put. I generally agree. I am glad I covered my short yesterday. Even such, I think the stock is still in serious trouble, and to me this may present a new opportunity to short from a higher level.
I see it as a good but temporary fix. The short term credit facilities are still a bit up in the air.
$20 million will only go so far. EGLE has a chance for survival now though definitely.
I personally have raised it from strong sell to sell on the news.
They got $20 mil to get them through the next several months. The long term debt was also restructured, but the company will still need more short term credit after the $20 mill is burned.
Certainly a positive development for the company, but not something that means the company will 100% never be able to go bankrupt in the future.
I must say that your comment is truly excellent and should be a model for most commenters.
The news may even have come as a result of investor concerns over the company.
I think it is truly an excellent development for EGLE, with limitations. It shows that lenders are willing to soften the brunt of market forces, but $20 million will only get EGLE so far.
I would say it buys a window of about 4 months that didn't exist before. This is a good idea by RBS because it gives RBS some more time to feel out the economy to decide how tough to get on the credit terms after that $20 million runs out.
I'd say it raises my opinion of EGLE from strong sell up to sell. It also increases the pressure for other lenders to other drybulkers to either step up to the plate or get tough.
in case you are too ignorant to have learned after being told, at least three times now, if ORIG shares fall in value (market cap), this causes a loss of equity and equity per share on Dryships balance sheet.
But, only in reality, and not on the books as of now due to the accounting method being used. But because markets are efficient, one is best off following true market values rather than reported values which are dated.
"Unbelievable" is quite a pathetic support for your "argument" I must add.
Who knows? I'm not too caught up in the oil rig business. I feel that is a red herring of Economou's. Essentially, the whole business is a loser which he has sold off to idiots.
Meanwhile, he has used the proceeds to help pay himself his preferred dividends and management expenses.
One day, careful investors will probably find out that ORIG is a piece of garbage, not the growth engine they were led to believe it is.
Depreciation is more than a tax practice. In fact, Dryships didn't even pay taxes in its early days due to some kind of attempted offshore tax issue.
I agree with your statement about selling boats off at this point shouldn't matter whether gains or losses because this is an issue of emergency liquidity and survival. The fact that Dryships did sell off one ship last quarter, and it just happened to be for a gain is a joke. They continually try and fool investors that these boats are leveraged investments which will rise in value.
Dryships stock price does matter quite a bit, as the nasdaq listing requirements could become in jeopardy. If DRYS falls below $1 for 30 days, it will have 6 months to get the average price up or be delisted.
Not a trivial issue at all.
Additionally, getting below $2 at all is very dangerous for the company's survival because many potential debtholders will not be able to short shares of the company as a hedge, and as a consequence they will just entirely avoid the debt. This will cause Dryships' lending costs to rise dramatically, potentially completely bankrupting the company soon.
In other words, if the stock goes to 50 cents, the company WILL go bankrupt.
Depreciation is only for tax purposes? Gee, I always thought it was both tax and financial reporting.
The recent sale was only 180 million. That is still short unless significant credit is obtained. And even then, that is still only a 6 month to one year fix. Economou is planning on expansion too!
We can disagree about the risk reward, but the market adjusted price/book is not below 1 at all. In fact, for all intents and purposes, this company has negative equity even at market adjusted prices. How can a price/book be even a positive number in that case?
Dryships has 4.8 billion in debt, while the market cap of ORIG is 1.8 billion. Dryships owns only 65.2% of that, which equals 1.17 billion at today's price ($13.32), which could easily fall several hundred million in a week's time if a recession develops.
That 1.17 billion is currently written on the balance sheet in a consolidated form of 4.6 billion! The drybulk and tanker fleet are on the books at less than 2 billion, which is grossly overstated at this time, probably 50% or so.
So assets are realistically 1.17+1 = 2.17 billion + about 1.9 billion in other basically temporary assets for a grand total of no more than 4.1 billion in total assets , with 4.8 billion in debt.
The ONLY chance for this company to survive is if ship values of all kinds rise rapidly. With the economy the way it is, this is impossible for a minimum of a year. So the next year is very up in the air.
Economou has designed it this way. Either ship values rise, or the company cannot operate. I think that is poor management from a stockholder's perspective.
Shareholders three months back were flying high thinking Dryships was back because the shares rose. Well, we are flirting with breaking through to touch an all time low soon.
Eagle Bulk Shipping Buys Some Time [View article]
I see it as a good but temporary fix. The short term credit facilities are still a bit up in the air.
$20 million will only go so far. EGLE has a chance for survival now though definitely.
I personally have raised it from strong sell to sell on the news.
The Only Way DryShips Can Survive [View article]
Certainly a positive development for the company, but not something that means the company will 100% never be able to go bankrupt in the future.
The Only Way DryShips Can Survive [View article]
The news may even have come as a result of investor concerns over the company.
I think it is truly an excellent development for EGLE, with limitations. It shows that lenders are willing to soften the brunt of market forces, but $20 million will only get EGLE so far.
I would say it buys a window of about 4 months that didn't exist before. This is a good idea by RBS because it gives RBS some more time to feel out the economy to decide how tough to get on the credit terms after that $20 million runs out.
I'd say it raises my opinion of EGLE from strong sell up to sell. It also increases the pressure for other lenders to other drybulkers to either step up to the plate or get tough.
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
book value = equity
the end.
book value per share = equity / number of shares
in case you are too ignorant to have learned after being told, at least three times now, if ORIG shares fall in value (market cap), this causes a loss of equity and equity per share on Dryships balance sheet.
But, only in reality, and not on the books as of now due to the accounting method being used. But because markets are efficient, one is best off following true market values rather than reported values which are dated.
"Unbelievable" is quite a pathetic support for your "argument" I must add.
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
Meanwhile, he has used the proceeds to help pay himself his preferred dividends and management expenses.
One day, careful investors will probably find out that ORIG is a piece of garbage, not the growth engine they were led to believe it is.
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
That has been the business plan thus far.
I think EXM is 100% going under, EGLE 95% sure going under.
It is slightly early to predict DRYS, but I have to think those collapses are not going to make DRYS survival easier.
The Only Way DryShips Can Survive [View article]
I agree with your statement about selling boats off at this point shouldn't matter whether gains or losses because this is an issue of emergency liquidity and survival. The fact that Dryships did sell off one ship last quarter, and it just happened to be for a gain is a joke. They continually try and fool investors that these boats are leveraged investments which will rise in value.
Dryships stock price does matter quite a bit, as the nasdaq listing requirements could become in jeopardy. If DRYS falls below $1 for 30 days, it will have 6 months to get the average price up or be delisted.
Not a trivial issue at all.
Additionally, getting below $2 at all is very dangerous for the company's survival because many potential debtholders will not be able to short shares of the company as a hedge, and as a consequence they will just entirely avoid the debt. This will cause Dryships' lending costs to rise dramatically, potentially completely bankrupting the company soon.
In other words, if the stock goes to 50 cents, the company WILL go bankrupt.
The Only Way DryShips Can Survive [View article]
The recent sale was only 180 million. That is still short unless significant credit is obtained. And even then, that is still only a 6 month to one year fix. Economou is planning on expansion too!
We can disagree about the risk reward, but the market adjusted price/book is not below 1 at all. In fact, for all intents and purposes, this company has negative equity even at market adjusted prices. How can a price/book be even a positive number in that case?
Dryships has 4.8 billion in debt, while the market cap of ORIG is 1.8 billion. Dryships owns only 65.2% of that, which equals 1.17 billion at today's price ($13.32), which could easily fall several hundred million in a week's time if a recession develops.
That 1.17 billion is currently written on the balance sheet in a consolidated form of 4.6 billion! The drybulk and tanker fleet are on the books at less than 2 billion, which is grossly overstated at this time, probably 50% or so.
So assets are realistically 1.17+1 = 2.17 billion + about 1.9 billion in other basically temporary assets for a grand total of no more than 4.1 billion in total assets , with 4.8 billion in debt.
The ONLY chance for this company to survive is if ship values of all kinds rise rapidly. With the economy the way it is, this is impossible for a minimum of a year. So the next year is very up in the air.
Economou has designed it this way. Either ship values rise, or the company cannot operate. I think that is poor management from a stockholder's perspective.
Shareholders three months back were flying high thinking Dryships was back because the shares rose. Well, we are flirting with breaking through to touch an all time low soon.
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
Afterall, my operating cash flow would be $100, maybe even more due to the taxes being added too.
Sorry, but I think that company sucks. The depreciation isn't going away at all.
I especially think that company sucks if it also has less than enough current assets than necessary to even get through the year.
Why not instead invest in companies which have positive profits?