So ATI has run out of cash again. Typical move by ATI releasing a positive sounding presentation one day, followed by horrific accounts the next.
Where to begin...
So ATI was out of cash on 31 March, just days after raising $30M with a convertible bond. Do you really believe this money went into capex to fix the plant? Looks like it went straight out the door to pay overdue suppliers. This is the same thing that happened to the previous capital raising in December 2011. ATI management sure has brass balls to do this in two successive quarters. And expect they will try to do the same again this current quarter.....
If you offset the $21m working capital deficit in the sub with the $23M in the parent, that leaves $2M net cash. And that excludes any payables in the parent, so a real consolidated working capital number would be negative ...two months ago. So it would be a bigger negative number today - say $+10M....
The $10M due from the MD for his share purchase is now a month overdue. Don't know where he's getting his financial support from, but expect it's not a bottomless well. And as they are handing over the cheque for $10M, he will be telling them he needs more.
But it's going to be okay right - since ATI will be at 65% capacity in a couple of months. FYI the reason we keep seeing this 65% number in forecasts is this is supposedly the magic breakeven number, at which time the bleeding stops and cashflow turns positive. So it's important to keep telling everyone that 65% is just around the corner. Those of you placing any weight on this prediction of "65% real soon" should take heed of previous forecasts from ATI and of the disclaimer regarding forward looking statements in all public disclosures. I attach zero probability to the "65% real soon" prediction from ATI. My forecast is "20% continues and another $30M needed real soon"
Simple fact is the plant is running at <20% now. With little changed since ATI flicked the switch last September. ATI has been struggling with low cash since Q3 2011, and has not been able to invest the funds required to fix the plant properly.
Why do I post when I don't hold ATI shares. These people are about to go hunting for cash again real soon, so a warning from a disinterested party is warranted.
ATI Price at posting:
43.0¢ Sentiment: ST Sell Disclosure: Not Held
