I think so, but who am I? Had a look at the announcements a few...

I think so, but who am I?

Had a look at the announcements a few times and the past.

From what I assume, the story goes like this.

Their financial position at the moment is the worst it can be. They made investments in certain projects that aren't yet showing through on the income statement/cashflow statement. These investments were pretty substantial (Blackwater, new model rigs (more below), acquiring some Reichdrill water well rigs which were idle, etc..).

Add to this the fact that the auditors would probably ask for a write-down of certain assets, that means even higher leverage ratios, and thus a violation of the covenants. The write-down of asset values is really stupid I guess, since most of the rigs are employed and are already undervalued on the balance sheet. I think there are like 10 rigs with a value of zero.

As an aside, I heard the covenants were pretty arbitrary. One was the fact that Bob Hughes had to be the MD. That of course isn't the case anymore since he walked out of the door a months and a half ago.

But I guess new auditors will want to show they are doing something. So some things (Reichdrill acquisition goodwill, some inventory, the acquired compressors?) will get impaired.

They are also quite active on multiple fronts, including the new rigs:
http://reichdrill.com/reichdrill-inc-will-showcase-new-rd-350-drill-minexpo-2016-las-vegas (if the link doesn't work, google it and open in cache).

The EBITDA margin stayed pretty flat (even increased a bit despite lower revenues) in last half year, and NRW's Action Drill & Blast unit had pretty stable margins, so I assume Hughes' margins shouldn't be under a lot of pressure (maybe 5% or so?). That still gives EBITDA in the range of 20 million, and means net debt/Ebitda of 2,5 maybe 3. Less than both Ausdrill and Action Drill & Blast, the 2 biggest other players in the field.

As an aside, you should look up the consulting firm they hired - Vantage Performance.
On their site they have a few examples of past projects, the majority in Mining services. They are quite enlightening, and you can almost copy paste Hughes' situation in a few of them.

The company is short on working capital I guess due to the expansion of certain projects (Blackwater, but also some other things). That can be an issue, and I wonder how they will work this out. On the Vantage site there are a few examples of similar companies with the same issue. How they will solve this is a questionmark to me. But from what I know, there are many ways they can get around this (selling assets - compressors for example -, not doing any capex and let the 1-1.5 million in cash-flow /month do it's work, work down the Reichdrill inventory -Reichdrill prouds themselves they own a large inventory of millions to accommodate clients at their immediate request - etc...). I just hope it is not a capital raise, since at the current share-price the dilution is terrible for a 5 million working capital raise or so..

The resignation of the directors is somewhat worrying, but I guess it's related last years AGM.
The compensation package got vetoed, and if this happens twice in a row, there are many complications for the BOD (google the ASX rules). I guess they rather resigned than be thrown out.
And from their expansion plans, seems like Forager would have vetoed down the package again.

The new director does have good credentials I think (being previous MD of Maca, one of the more efficient contractors around).

As for their survival, I think the past is pretty enlightening here.

Having looked at an AR from before they were listed, they had way worse leverage ratios (in years which weren't that good for mining services as well with the 2007-2009 crisis). To give you an idea: liabilities of 2 times assets and debt/EBITDA of more than 3 times. So I assume the (same) bank will not pull the credit lines (they also confirmed this in the recent updates, that the bank will not accelerate payments).

The positive of all this could be a catalyst for deleveraging, as something that has been holding this company back for a few years.

The most vexing thing about the situation is that the mining services sector has been on a run the last few months, and this company is still suspended and clouded in uncertainty.

But judging most boards, people are not very informed about this company. Even Forager, whom I hold in pretty high esteem, have written off this company in the past (look at the report last year when they got suspended for not posting their AR in time, and more recently as well).

Hope this helps, but that is about what I know.