The EXM restructuring resulted in massive share dilution. Absent a significant upturn in the dry-bulk market over the medium term, the Panayiotides family capital injections of US$ 45 mio at a deep discount of US$ 1.75 per share left little, if any, equity value remaining in the company for public shareholders. Yet the stock share value has been soaring due the market perception that the company has been relieved of immediate default risk. Excel shares are worth approximately 60% of the previous valuation after the equity dilution but the risk of going to zero is diminished.
The EXM loan workout plan got mixed reviews with stock analysts and even one downgrade after an earnings announcement.
The successful waiver negotiations and principal repayment deferral were seen as positive signs for the viability of the group. It demonstrates that banks are swilling to work with shipowners and do not yet have an appetite for seizing vessels Generally things tend to get nasty later in the downturn cycle as weak market conditions persist and banks start looking to liquidate the losses to get them off their books.
As it stands now, the Panayotides family's stake in Excel increases to 47% from the previous 11%, and boosts the overall share count by 69%. Excel shares are worth approximately 60% of the previous valuation after the equity dilution but the risk of going to zero is diminished. The negotiated waivers and deferments essentially remove the possibility of foreclosure until 2011, widening the time horizon for recovery. Further the restructuring terms give the group enough cash liquidity to pay for newbuildings (US$ 110 mio) and debt repayment (US$ 207 mio) out of an expected cash flow of roughly US$ 300 mio.
A successful outcome depends on future market conditions. If conditions remain weak and the group is plagued with a new rash of charterer defaults, they could be looking for a new capital infusion down the line. If conditions improve, there could be real potential for shareholders to recoup some of their losses.
Most analysts cautiously kept their previous ratings. The day after the bulker owner posted a US$ 329 mio quarterly loss, however, Maxim's Charles Rupinski cut his rating on Excel's New York-listed shares from "buy" to "hold". He stressed that EXM continues to be a highly volatile play in the dry-bulk industry, especially as its recent debt restructuring gives the company further staying power in terms of liquidity over the next several quarters; but cautioned that with its high debt load, the company will need sustained improvements in the overall dry-bulk market to work as a value proposition.
The EXM loan workout plan got mixed reviews with stock analysts and even one downgrade after an earnings announcement.
The successful waiver negotiations and principal repayment deferral were seen as positive signs for the viability of the group. It demonstrates that banks are swilling to work with shipowners and do not yet have an appetite for seizing vessels Generally things tend to get nasty later in the downturn cycle as weak market conditions persist and banks start looking to liquidate the losses to get them off their books.
As it stands now, the Panayotides family's stake in Excel increases to 47% from the previous 11%, and boosts the overall share count by 69%. Excel shares are worth approximately 60% of the previous valuation after the equity dilution but the risk of going to zero is diminished. The negotiated waivers and deferments essentially remove the possibility of foreclosure until 2011, widening the time horizon for recovery. Further the restructuring terms give the group enough cash liquidity to pay for newbuildings (US$ 110 mio) and debt repayment (US$ 207 mio) out of an expected cash flow of roughly US$ 300 mio.
A successful outcome depends on future market conditions. If conditions remain weak and the group is plagued with a new rash of charterer defaults, they could be looking for a new capital infusion down the line. If conditions improve, there could be real potential for shareholders to recoup some of their losses.
Most analysts cautiously kept their previous ratings. The day after the bulker owner posted a US$ 329 mio quarterly loss, however, Maxim's Charles Rupinski cut his rating on Excel's New York-listed shares from "buy" to "hold". He stressed that EXM continues to be a highly volatile play in the dry-bulk industry, especially as its recent debt restructuring gives the company further staying power in terms of liquidity over the next several quarters; but cautioned that with its high debt load, the company will need sustained improvements in the overall dry-bulk market to work as a value proposition.
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