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A KNEE JERK REACTION AND ANY IMMEDIATE DEBT REPAYMENT ISSUES SOLVED WITH CEO OWNING 54% IN FALCON ENERGY
MAYBE CLOSE FLAT OR DAY HIGH TODAY
CRUDE OIL SURGING TO $52.40
ONLY A PUNY 100 SHARES ON SELL QUEUE
MAJOR WALL STREET BANK IS REITERATING A BUY CALL ON CRUDE OIL
FORECASTING A 20% MOVE UP FROM CURRENT LEVEL WITHIN MONTHS
PROBABLY A KEEJERK REACTION TODAY AS THERE IS TOTALLY NO SELLER IN QUEUE
MIGHT EVEN CLOSE FLAT BACK UP ?
FALCON IS STILL SEEING ITS SHARE PRICE UNDERAVALUED WHEN IT DID A FEW SHARE BUY ABCK RECENTLY AROUND 13 CENTS
Falcon scored an own-goal because of CH Offshore sale. They got $20mio for selling 21.8% stake. If Falcon continues to hold 65%, it is only worth $59mio (recognized value). The secondary market bond due is already $50mio, what do they have left for the CIMB loan that surfaced last weekend and the jack-up rig delivery in second quarter of 2017 (now)?
The gem is CH Offshore. To be fair, why don' t they sell CH Offshore to existing Falcon investors at 13 cents. Norwegians Oilfield services operators based in Singapore will also be keen buy CH Offshore at > 13 cents. Who is the buyer Zhang Haibo? Why was he given such a sweet deal?
danger ( Date: 10-Apr-2017 10:33) Posted:
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The jack-up rig payment, CIMB loan and secondary market bonds due are in excess of their market cap. Falcon has a viable business and they are just completely unable to refinance their debts according to their press release last weekend, " It is difficult to obtain suitable refinancing of loans on terms favourable to the company in the current economic climate. If the company were to accept unfavourable refinancing terms, its shareholders' interest would be prejudiced." http://www.straitstimes.com/business/companies-markets/falcon-energy-sells-stake-in-ch-offshore-for-20m. Instead of waiting for forced-liquidation (business ceased) by creditors, the company should consider voluntary filing for bankrupcy so that they can begin debt-restructuring talks and their business can continue to operate.
MarcPh ( Date: 10-Apr-2017 10:07) Posted:
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Nontheless , FALCON STILL HOLDS AROUND 65% IN CH OFFSHORE
The opportunity is in CH Offshore.
CH Offshore is trading a historical lows triggered by Falcon' s stake sale, fundamental changes do not result in such meltdown in share price. The 13 cents pricing was unfair for Falcon' s shareholders. Today' s historical low for CH Offshore for will trigger margin-calls for weaker retail investors or even CIMB will reprice their loan quantum to Falcon. Many will want to wait and buy CH Offshore for 13 cents. Dollar-for-dollar, the same investment can reap better returns in CH Offshore than Falcon.
Remember, Ezra went bust but not their subsidiary Triyards.
danger ( Date: 10-Apr-2017 10:13) Posted:
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IN EVERY CRISIS COMES AN OPPORTUNITY ..
CRUDE OIL SURGING TO $52.40 NOW
Falcon is back at 11 cents this morning.
Now we are sure that last week' s selldown from 15 cents was because of the insiders were shocked by the steep discount of CH Offshore sale-price.
AND it means that the surge from 11 cents to 15 cents two weeks ago, is also because these people heard about a potential stake-sale but never expect the price to be so low.
SGX regulators should act.
MarcPh ( Date: 10-Apr-2017 08:51) Posted:
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On Oct 2016, its auditor, Deloitte & Touche LLP, gave an unqualified opinion expressing doubt that the company can continue as a going concern. If cash is so tight, it makes us wonder why they kept conducting minute amounts of share buy-backs. Now that they know that subsidiary CH Offshore shares are pledged to CIMB bank, are some Falcon' s share also pledged by some shareholders to banks?
The biggest issue is delivery of Falcon Energy' s jack-up rig from Keppel. According to Keppel' s press release in Jan 2017, Keppel mentioned that " We have received requests to defer the delivery of the jackup for Falcon Energy to the second quarter of this year, and that for BOT Lease Co to January 2019. For the Falcon rig, we have received 20% downpayment, and for the BOT rig, 60% of the milestone payments." http://www.kepcorp.com/en/news_item.aspx?sid=6917 http://www.kepcorp.com/en/news_item.aspx?sid=3880
Next, Falcon has secondary market bonds due to mature 5-months later. According to bloomberg' s BVAL score pricing, it is priced at 25% below par or over 80-90% yield-to-maturity (YTM). It means that if you buy the bond now, you make 80-90%pa (till maturity). https://www.bondsupermart.com/main/bond-info/bond-factsheet/SG6SJ3000005
Their cashflow is really tight in the next 6 months.
sheerluck ( Date: 07-Apr-2017 23:45) Posted:
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The sales of CH Offshore had such steep discount means that the boss does not have the financial means to privatize the company. Instead of owning more, he is indirectly parring his stake.
Falcon is a good company, $20mio is not a big deal to them, did they turn to IE Singapore&rsquo s Internationalisation Finance Scheme (IFS) and SPRING&rsquo s Bridging Loan (BL) for companies in the Marine and Offshore Engineering (M& OE) industry. According to Ministry of Trade & Industry, both schemes could catalyse about S$1.6 billion of loans over a period of one year. Given Falcon' s strength, couldn' t they qualify for at least $10 or 20mio?
danger ( Date: 30-Mar-2017 09:48) Posted:
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There are three things fishy with Falcon
- The CH Offshore stake-sale was likely leaked. Such sales will not happen overnight. When insiders heard about partial sales of their stake in CH Offshore, the share price of Falcon surged from 11cents to 15 cents within 1-2 weeks. When insiders knew that disposal was a steep discount to CH Offshore&rsquo s last done price. Falcon plunged back to 11-12 cents before the Trading Halt.
- The sale price of CH Offshore is 55-60% discount of the last traded price. It was very crazy. At about 13-14cents for CH Offshore (last done 28 to 30 cents), there would certainly be plenty of potential buyers who are willing to pay 13 cents for CH Offshore. Selling half of the quantity at 30% discount will probably fetch Falcon the much needed $20mio. Why is the sale price so dirt cheap? Most of all here don&rsquo t mind buying CH Offshore at 13 cents.
- The boss is really broke. He was once the richest 40 in Singapore and today, he cannot even face a simple rights-issue (being majority shareholder) to raise $20mio for Falcon.
This is just for discussion sake:
FEG is sold a portion of CHO for S$0.13. The latest NAV of CHO was S$0.452 based on 31 Dec 2016 report. That' s a whopping 70% discount to the NAV!
Will CHO selldown to near that price tomorrow?
Wouldn' t FEG do better by issuing rights to raise the money? Or the majority shareholders do not have the money to buy the rights anyway.
Oh yes... likely i will re enter in falcon on dip if any
Whats past is past liao. Overall i think going forward its a positive development for falcon since the company have reduced its leverage/loans/financial commitments/interest cost with additional of $4.32 million to boast its working capital purposes. In addition, after US fired missiles on syria, oil and gold prices have shot up...
Valid point. CHO paid out about 26cts since FEG forced its way in so the loss is about 10.5cts per shares net. However, for their FY, they will recognised that US$35.37mil disposal losses in additional to their own profit/losses.
But this signalled that FEG is cash-strapped. If not why sell at such a huge losses net cost taking into consideration is about 23.5cts but they re selling at 13cts per piece. Also CIMB is recalling some loan from FEG. O& G needs all the liquid they can hold to tight over this troubled period.
Looks unlikely FEG has cash to take itself private.
Let see how market react to this news.
speed88 ( Date: 07-Apr-2017 22:44) Posted:
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Did you know you exclude the huge amount of dividend they paid out from CH offshore back to Falcon after the acquisition? Not that big a loss of 49.5 to 13c..