It is a very difficult and competitive market for MS companies...

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miningman2012

267 Posts.

92

04/04/15

12:33

Post #: 15035206
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Originally posted by morley ↑

My first thought is that directors still think the business is salvageable, or at least that the money will still be there for 6 - 12 months. Interest rate is not overly high for this sort of arrangement. However, these are "key terms" only, so the full details aren't likely to be known until they hold a meeting. I guess it is most likely part of negotiations to secure an underwriter? Directors still prefer to get the debt secured, so it's still not confirmation of huge faith in the future.

My second thought is that overall, it seems there is still hope, but what kind of margins will they have for the next few years? BCI's announcement on Thursday re terminating WTP at the Nullagine JV implies that Viento (and others) put in very cheap rates on the Warrigal hub contract. I'm not sure if it also means Viento has a shot at the remainder of the NJV works (maybe $60m/yr if I'm reading it correctly?). However, even if this is the case, the size of margin available would be a concern.

The final thought is that if the rights issue proceeds as previously outlined, my calcs suggest there will still be a fully diluted market cap of around $15m (including attaching options) at a share price of 4 cps. Until they prove profitable, or the market for contracting improves, I don't see much reason for the share price to improve beyond that, although at least there may be a little more liquidity for a while.

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It is a very difficult and competitive market for MS companies and only the strong will survive. The survivors will have but not be limited to
Competent Management
Lean/Low Overheads
Little or No Debt
Own the Equipment required to undertake contracts

Unfortunately Viento fail on each one of these points

Director loans and small capital raising is only a band aid fix. Until they address the above points they have ZERO chance of survival

VIE Price at posting: 4.9¢ Sentiment: Sell Disclosure: Not Held
1 Upvote

0 Great analysis

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