Bargains Bargains Bargains

[Quant]

MRM , the moral of the story here is todays cheap is tommorows expensive , you just know this isnt going to end well . Not a bargain more like reckless speculation , just my 2c

 

[luutzu]

MRM , the moral of the story here is todays cheap is tommorows expensive , you just know this isnt going to end well . Not a bargain more like reckless speculation , just my 2c

Got an order executed at $0.205 a share. Let's see how she goes ey.

 

[Quant]

Got an order executed at $0.205 a share. Let's see how she goes ey.

I hope it goes well for you

 

[diver05]

Mermaid down to .215 ..... and sliding

 

[luutzu]

Mermaid down to .215 ..... and sliding

Hence, bargains bargains bargains.

In all seriousness, it's my opinions that MRM is a great bargain. While the future might work out very differently than what I am expecting, if MRM were to go under and I lose all my cash, I'd do it again in the future if another company presents the same set of metrics.

Let's put aside my (self-serving, delusional) thinking... there are two experienced offshore service vessel operators holding majority stake in MRM.

A Singaporean who used to start and operate a similar business, sold it off to some private equity years before... he now own about 15% of MRM.

A Qatari [?] OSV operator also own some 5% of MRM.

From memory, these two, presumably experienced, know what they're doing, business operator bought in last year at about $0.30 a share.

Then last week, a HK/Singaporean fund manager increased their holdings to about 6%.

--------

Yes, we shouldn't buy or sell based on some smart money's decision. But it might indicate that we're not total idiots who's gambling with their few bucks.

Now let's go to our own reasoning....

Will MRM Float

Yes it will survive the next 2.5 years.

The only thing hanging over its head was the ~$470M debt [that's total debt, ignoring the $200M capital structure/operating debt MRM and similar companies always have on its book as part of its cap structure, that and not having a lazy balance sheet].

The banking syndicate have agreed to a big principal repayment at end of June [some $45M], then have the rest settled in Sept.2019 [?].

This mean that the bankers are being owned by MRM... they're forced into a situation where if they push hard now, they'll lose everything. Hence the generous terms so that in two years they'll get their money back, with interests.

Will they get their money back by then?

Can't predict but it's looking a lot likely.

For one, oil is stabilising. Look like it will rise to a price where it's profitable again for oilers to drill offshore.

While that's not a guarantee, that US shalers will keep "glutting" the market and OPEC will get back to the price war again... Can these guys do it another year or two?

With Saudi waging wars in Yemen and Syria, contracted to buy billions more of arms... All gulf states and OPEC countries gutting social programmes and subsidies because the low oil price is pushing their finite resources and treasury to the bone.

Can't keep that up for too much longer.


Then there's what MRM management is saying... They've been downright depressive to listen to the past couple of years but in the recent announcement are showing sign of some clearing ahead.

There's the increased tendering activities; there's the fact that licenses will be revoked if oilers do not explore or work the fields they're licensed to.

Activities is looking likely to be picking up within the next year.

--------

TAKEOVERS

Total assets when MRM bought out Jaya in 2013 [some 6 to 10 months before the oil crash] was about $1.3Billion.

MRM has since written down some $500million on its assets.

Its NTA after all these non-cash writedown is some $1.76 per share. A bit less once the bases are sold off and debt repaid.

It's now selling for $0.22, 23cents a share. Or around $80M for the entire company.

That's a target for a takeover if I ever see one.


BUT here's the good news...

With the sales of its two Australian bases and a slipway... Some are thinking that MRM is desperate it have to flog off its crown jewel.

Maybe not.

In its heyday, the bases earn a fairly good margin. And it certainly does make it more enticing to clients if you tell them you can provide a one-stop logistic shop.

But in recent years, the bases earn about $1 a year [or 6 months].
It's a very good price, given current condition, to be able to flog that off for $55M in one hit.

This make the bankers happy, avoid bankruptcy...

But more important, to my mind anyway, is it takes away the attractiveness of a potential raid.

For competitors wanting to expand into Australia on MRM's expense, getting in on the cheap, it's harder to make the case where there's no base to build any kind of economy of scales - there's just a HQ and loads of vessels.


Anyway, might work out alright. The money I put into this isn't my gambling money so let's hope it does work out.

 

[Quant]

6 months on and the majority of the bargains must be bigger bargains now

 

[So_Cynical]

6 months on and the majority of the bargains must be bigger bargains now

MRM is now 17c ~ the post above yours.