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Latest Forum Topics / RickmersMaritime  Post Reply
Container ships charterer with 170+ years history
mortal_azazel
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24-Aug-2009 15:43     
 
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Nope, thinking to load up
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dealer0168
Elite
24-Aug-2009 15:33     
 
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 Alert Admin 		u still holding ah.........pal

mortal_azazel      ( Date: 24-Aug-2009 15:24) Posted:

Hitting 40cts soon.....
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mortal_azazel
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24-Aug-2009 15:24     
 
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 Alert Admin 		Hitting 40cts soon.....
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dealer0168
Elite
24-Aug-2009 14:28     
 
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 Alert Admin 		sell at strength
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mortal_azazel
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24-Aug-2009 14:25     
 
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 Alert Admin 		Still struggling between 0.42 ~ 0.43 .....  
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sureesh40
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24-Aug-2009 12:11     
 
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So you have sold off all your units. I thought you accumulated quite a fair bit.



matthewsoh      ( Date: 24-Aug-2009 10:49) Posted:

I dont know like i dont know the hidden risk in it .. ahha.. Market drop , the price will drop like shit  exp XD .. so i siam
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mortal_azazel
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24-Aug-2009 11:23     
 
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Brother you are right ....  More sell than buy ....  time to move to other counter
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matthewsoh
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24-Aug-2009 10:49     
 
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 Alert Admin 		I dont know like i dont know the hidden risk in it .. ahha.. Market drop , the price will drop like shit  exp XD .. so i siam
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mortal_azazel
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24-Aug-2009 10:36     
 
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 Alert Admin 		Today market bull.... anything will price up for sure ....  besides 2 more days for XD so maybe some folks wanna take the dividend even though it is only USD 0.6cts
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christan
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24-Aug-2009 10:27     
 
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 Alert Admin 		gd writeup but why price UP

matthewsoh      ( Date: 24-Aug-2009 09:33) Posted:



I quoted this from the other forum.

"Mr_X wrote:


Long time forumers may remember a piece I wrote on Frasers Commercial Trust’s recapitalization exercise a month back. Back then, I articulated my thoughts to bring some sense of balance to what I felt was an overly pessimistic view of the exercise. In the commentary, I urged readers to adopt a neutral stance and to avoid the knee jerk reaction of lambasting F&N due to certain perceived injustices around the deal.

Recent events at Rickmers have once again prompted me to comment on their FY09Q2 massive DPU cut. The difference this time round though, is I feel many fellow investors are underestimating the severity of the challenges facing Rickmers and being far too optimistic to what management has to say. I’ve seen their CEO (Hensen) and CFO (Ban Huat) in action before. Pretty charming fellows, but that’s no substitute for solid business performance.

Quite a number of Rickmers investors think that this DPU cut is just a temporary measure to conserve cash and the tide will turn when the economy shows recovery. I don’t think so. In fact, the trust is pretty much screwed short of a massive bailout by either the sponsor or a strategic investor. The DPU cut is no business prudence; it is in fact the symptom of an unsustainable business model and the lack of prudence that led to bad decisions made in the past.

The key issues facing Rickmers are:
1. Loan to value covenants under existing financing terms
2. Expiry of US$130million facility
3. US$711 million committed expenditure
4. Shortfall in funding for remaining ~US$200 million Hanjin ships
5. Redelivery of Maersk Djibouti

All issues except the last are financing problems. These are not exactly big revelations; management to their credit is candid in sharing them with the investment community. But what I think is missing among many retail investors is the sense of urgency, appreciation of the severity and an understanding on what these challenges really mean for the next 5 years.

Let’s start off with the most pressing issue, the expiry of US$130million facility in 8 months’ time. Considering that the collaterals, i.e. container ships, have had at least half of their values shaved off since the good old days, it’s highly doubtful if the banks will allow a full debt rollover. Even if such a thing is possible, the terms would be detrimental to unitholders. Rickmers’ current loan terms are somewhere 90 to 120bps above LIBOR. There is no way that they are getting back those terms, my best guess will be somewhere in the region of 250 to 350bps margin attached with some stringent cash lock covenant.

Then comes the ever elusive discussion with bankers on the waiver of LTV covenants. Will a waiver be granted? Almost for sure, though not because the bankers are Mother Theresa material. They don’t really have a choice. Creditors stand to loose out if they force an asset firesale due to depressed box ship value, the best chance they have is milking the trust and its charter revenue for all it is worth. Like all things in life, a waiver does not come free of charge. The likely price would be a combination of once-off payment for “waiver fees”, massive increase in debt margins, debt amortization and cash lock covenants.

LTV waivers have bearing on the credit facility available for funding the remaining Hanjin ships. Management has indicated that existing facilities amount to US$170million, leaving a shortfall of US$30million in funding. Under a LTV waiver, credit capacity is bound to be reduced. The shortfall is potentially somewhere in the region of US$60million. Management intends to top up any of such shortfall with internal cash, but that of course wipes out 75% of their cash reserves (currently US$80million).

The most serious of all challenges no doubt lies in its US$711million capital expenditure for 4 super size 13,100 TEU newbuilding. Short of a bailout or sale & leaseback, the only viable solution is a combination of debt and equity. With depressed ship values, debt funding is unlikely to exceed 50%. That leaves around US$360million equity needed. Current market capitalization is around US$135million.

Considering the poor metrics of the trust, any rights issue will need to be at least 40% below market price in order for underwriting to be arranged. That brings us to around US$81million possible for every 1:1 rights raised. Considering that the trust needs US$360million equity, a 5 rights for every 1 existing unit exercise is probable. I don’t think the dilution impact from such an exercise needs further elaboration. Such a high cost of equity and unfavorable debt markets ensure that these large acquisitions are most certainly going to be DPU destructive rather than accretive.

The redelivery of Maersk Djibouti though no serious challenge, is an unwelcome distraction in this climate. My understanding is that the current charter rate of US$22,000 / day is likely to fall to around US$9,000 / day, a 60% reduction. Cetris paribus, that translates to a DPU reduction of 0.75 cents per annum.

In summary, barring any unforeseen circumstances, the next 12 months will likely see a highly dilutive equity raising either through rights issue and/or private placement, significant increase in financing cost, some form of debt amortization program together with cash lock arrangements. Considering the massive debt load of the trust, it is my belief that distributions are likely to be suspended or maintained at some token amount no more than US$5million per quarter (~diluted quarterly DPU of 0.15cents).

I urge caution in bargain hunting based on simple yield calculation of the existing 0.6cents DPU, good operating performance or a good brand name. Ultimately, an annuity-like trust is bought for stable and meaningful DPU, not some esoteric operating performance or brand name. Assuming that Rickmers obtains the necessary capital to function as a going concern, chances are the trust will not be making any meaningful distributions for the next 3 to 5 years depending on the trajectory of an economic recovery."

 

More than meets the eye .. wont dare to hunt for cheap stuff

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matthewsoh
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24-Aug-2009 09:33     
 
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I quoted this from the other forum.

"Mr_X wrote:


Long time forumers may remember a piece I wrote on Frasers Commercial Trust’s recapitalization exercise a month back. Back then, I articulated my thoughts to bring some sense of balance to what I felt was an overly pessimistic view of the exercise. In the commentary, I urged readers to adopt a neutral stance and to avoid the knee jerk reaction of lambasting F&N due to certain perceived injustices around the deal.

Recent events at Rickmers have once again prompted me to comment on their FY09Q2 massive DPU cut. The difference this time round though, is I feel many fellow investors are underestimating the severity of the challenges facing Rickmers and being far too optimistic to what management has to say. I’ve seen their CEO (Hensen) and CFO (Ban Huat) in action before. Pretty charming fellows, but that’s no substitute for solid business performance.

Quite a number of Rickmers investors think that this DPU cut is just a temporary measure to conserve cash and the tide will turn when the economy shows recovery. I don’t think so. In fact, the trust is pretty much screwed short of a massive bailout by either the sponsor or a strategic investor. The DPU cut is no business prudence; it is in fact the symptom of an unsustainable business model and the lack of prudence that led to bad decisions made in the past.

The key issues facing Rickmers are:
1. Loan to value covenants under existing financing terms
2. Expiry of US$130million facility
3. US$711 million committed expenditure
4. Shortfall in funding for remaining ~US$200 million Hanjin ships
5. Redelivery of Maersk Djibouti

All issues except the last are financing problems. These are not exactly big revelations; management to their credit is candid in sharing them with the investment community. But what I think is missing among many retail investors is the sense of urgency, appreciation of the severity and an understanding on what these challenges really mean for the next 5 years.

Let’s start off with the most pressing issue, the expiry of US$130million facility in 8 months’ time. Considering that the collaterals, i.e. container ships, have had at least half of their values shaved off since the good old days, it’s highly doubtful if the banks will allow a full debt rollover. Even if such a thing is possible, the terms would be detrimental to unitholders. Rickmers’ current loan terms are somewhere 90 to 120bps above LIBOR. There is no way that they are getting back those terms, my best guess will be somewhere in the region of 250 to 350bps margin attached with some stringent cash lock covenant.

Then comes the ever elusive discussion with bankers on the waiver of LTV covenants. Will a waiver be granted? Almost for sure, though not because the bankers are Mother Theresa material. They don’t really have a choice. Creditors stand to loose out if they force an asset firesale due to depressed box ship value, the best chance they have is milking the trust and its charter revenue for all it is worth. Like all things in life, a waiver does not come free of charge. The likely price would be a combination of once-off payment for “waiver fees”, massive increase in debt margins, debt amortization and cash lock covenants.

LTV waivers have bearing on the credit facility available for funding the remaining Hanjin ships. Management has indicated that existing facilities amount to US$170million, leaving a shortfall of US$30million in funding. Under a LTV waiver, credit capacity is bound to be reduced. The shortfall is potentially somewhere in the region of US$60million. Management intends to top up any of such shortfall with internal cash, but that of course wipes out 75% of their cash reserves (currently US$80million).

The most serious of all challenges no doubt lies in its US$711million capital expenditure for 4 super size 13,100 TEU newbuilding. Short of a bailout or sale & leaseback, the only viable solution is a combination of debt and equity. With depressed ship values, debt funding is unlikely to exceed 50%. That leaves around US$360million equity needed. Current market capitalization is around US$135million.

Considering the poor metrics of the trust, any rights issue will need to be at least 40% below market price in order for underwriting to be arranged. That brings us to around US$81million possible for every 1:1 rights raised. Considering that the trust needs US$360million equity, a 5 rights for every 1 existing unit exercise is probable. I don’t think the dilution impact from such an exercise needs further elaboration. Such a high cost of equity and unfavorable debt markets ensure that these large acquisitions are most certainly going to be DPU destructive rather than accretive.

The redelivery of Maersk Djibouti though no serious challenge, is an unwelcome distraction in this climate. My understanding is that the current charter rate of US$22,000 / day is likely to fall to around US$9,000 / day, a 60% reduction. Cetris paribus, that translates to a DPU reduction of 0.75 cents per annum.

In summary, barring any unforeseen circumstances, the next 12 months will likely see a highly dilutive equity raising either through rights issue and/or private placement, significant increase in financing cost, some form of debt amortization program together with cash lock arrangements. Considering the massive debt load of the trust, it is my belief that distributions are likely to be suspended or maintained at some token amount no more than US$5million per quarter (~diluted quarterly DPU of 0.15cents).

I urge caution in bargain hunting based on simple yield calculation of the existing 0.6cents DPU, good operating performance or a good brand name. Ultimately, an annuity-like trust is bought for stable and meaningful DPU, not some esoteric operating performance or brand name. Assuming that Rickmers obtains the necessary capital to function as a going concern, chances are the trust will not be making any meaningful distributions for the next 3 to 5 years depending on the trajectory of an economic recovery."

 

More than meets the eye .. wont dare to hunt for cheap stuff
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matthewsoh
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24-Aug-2009 09:20     
 
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I made 16k with rickmer that time ( cum dividends) now lost 9.6 K  and i think is bobian loh ...
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matthewsoh
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24-Aug-2009 09:18     
 
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Today is a good day to sell .. part with them ... the risk is too high .. cos both my analyst friends told me that ... I dont mind losing 9.6k for now ..
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commando
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24-Aug-2009 00:49     
 
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really tat bad ?   i have no choice but to hold for long term

 
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mortal_azazel
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23-Aug-2009 23:53     
 
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 Alert Admin 		Interesting article...  let's see how tomorrow ....
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Zelphon
Senior
23-Aug-2009 20:26     
 
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I read that article..

A really good read and analysis of RMT...

I shall avoid RMT for the next 3 yrs... 



nstcsg      ( Date: 23-Aug-2009 19:32) Posted:



Good evening Guys/Ladies,

Just came across this post 'Comments on Rickmers Maritime'  in the CNA forum, written by Mr_X.  He articulated the risk associated with RM currently very well.  I am not sure if I can post external link so I refrained from doing so. Just do a search at that forum. Worth reading.  Make your own judgement in any case.  Just to share.
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nstcsg
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23-Aug-2009 19:32     
 
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Good evening Guys/Ladies,

Just came across this post 'Comments on Rickmers Maritime'  in the CNA forum, written by Mr_X.  He articulated the risk associated with RM currently very well.  I am not sure if I can post external link so I refrained from doing so. Just do a search at that forum. Worth reading.  Make your own judgement in any case.  Just to share.
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elysian
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23-Aug-2009 13:29     
 
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I think the finacing for the ships due next year is not the main isssue now - its the 130 million top-up thats needs to be resolved asap. 
I am surprised they are taking the trime on this one. Equity financing is out of the question given the current stock price. If they can resolve this and the covenants for now, i am sure the stock will be back to the 50s level atleast.
They hired the financial advisors very late in the game. In my opinion, Rickmers Trust is more a shipping company than a Trust - they lack the financial savviness of other Trusts listed in Singapore. Performance wise, they are still ok, notwithstanding the risks. 

  
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freeme
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23-Aug-2009 11:28     
 
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Sort of agreed. Rickmers problem now its the refinancing of those 700Mil + vessels. And Maersk their clients is also not doing well with im not wrong still in red over also.

Still a nice stocks but too much uncertainty. Either to invest back once its issues are clearer, or like u said, cheap unit px below 0.40 since risk is high.



dealer0168      ( Date: 22-Aug-2009 18:10) Posted:

Actually Rickmer should drop below 0.30 to achieve better DPU yield to investor.

But not sure if this range will be hit. Maybe i will start slowly accumulating at 0.32 (its 52 week low).

If it really hit, than start the collection. If did not hit, its ok lah......... go fr other counter than.



bh704428      ( Date: 22-Aug-2009 13:33) Posted:

so at wat price u will collect tis counter?

 
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dealer0168
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22-Aug-2009 18:10     
 
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Actually Rickmer should drop below 0.30 to achieve better DPU yield to investor.

But not sure if this range will be hit. Maybe i will start slowly accumulating at 0.32 (its 52 week low).

If it really hit, than start the collection. If did not hit, its ok lah......... go fr other counter than.



bh704428      ( Date: 22-Aug-2009 13:33) Posted:

so at wat price u will collect tis counter?

 



dealer0168      ( Date: 22-Aug-2009 13:29) Posted:

Emm want to pick up, wait some more. Still early to rush fr it now. Just my opinion
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