QIN is a completely different case. QIN has about $90 million...

QIN is a completely different case. QIN has about $90 million cash and its debt is not due until 2023.

@Ausbert,

I've seen many of these sorts of situations.

The problem with QIN is that it is a company that reports lots of accounting profits (cumulatively, almost $400m over the past 5 years), but that generates zero operating cash flows (and significantly negative free cash flows).

(In that way, it reminds me a lot of Babcock and Brown, the investment bank which also financially engineered significant profits, but whose cash flow statement told a totally different story.)


Let's look at QIN's capital position going forward:

The company had $90m in cash @ 30 December 2016.

Excluding dividends, the company consumes between $60m and $80m of cash per annum (in DH2016, alone, it chewed up $55m).

Which means that, by December this year (i.e., a little more than 6 months time), it will - for all intents and purposes - be down to its last $10m or $20m.

In the context of the business's imminent funding requirements, the thing which you point to to for reassurance - namely the refinancing of debt that is only due in 2023 - is totally immaterial.

It's the short-term position of capital adequacy (or lack thereof) that the company's creditors are sure to be squirming about.

I can't how you can possible envisage a positive outcome out of any of this.

(Please don't shoot the lowly messenger.)