Any individual or group that invests in the supply boat or drilling end of the oil business and expects to get their money back over the long term is nuts. The drilling business has always been run on borrowed money promising high returns. Very few ever see those high returns but they gamble anyway. The investment banks, hedge funds and venture capitalists don’t care because they are using their clients money and they get their management fees upfront. Drilling whether on land or at sea is a wildcat operation running on gambler’s money while paying the management ridiculous sums. Why anyone would invest in a contractor like a drilling or supply boat company is beyond me. If one really believes in the oil business they’d invest in an oil company. Shane just ran a scam on his investors who ran a scam on their investors and they have only themselves to blame. He’ll be happy and fatter.He also knows there is another sucker right around the bend.
of course the proof is in the amounts of cash the Bubba Thug took out of the operation over these past dozen or so years since he started building this house of cards? A person who truly is in it to build a financially strong company which will stand the tests of time (like since 2014) will leave as much as he can in and only take out what he needs to live modestly however he who is only looking to FUCK the investors will take every penny he can out and stash it behind a firewall where it will be safe from any takeback later. Here you can only blame the outsider money for allowing this. If I were a company like Jordan, one of the first requirements on Shane Boy would have been you get a fair salary and all the rest is in company shares so if you fuck us you also fuck yourself. NO CASH OUT…PERIOD!
Couldn’t agree more. Sooner or later you would think these finance guys would figure this out!
Don’t over estimate Finance people, or under estimate the Bayou Boys.
There are many people who have made money over the long term and just as many who have lost money over the long term. I think if you analyze them closely you can see that its mostly a matter of timing when judging failure or success. Chouest has weathered all of the down turns even with massive growth. Seacor always seems to make great deals during the bad times that are financially very rewarding years later.
But this cyclical nature is not exclusive to the supply boat or drilling business, it’s just as prevalent in the shipping business as well. I work for a private company that owns/operates ships, has been in business for over 75 years and is incredibly stable in this crappy market because they were smart with their expansion. During the boom years they took on modest growth and stashed away massive sums of cash. They’re now building a good bit of ships at drastically reduced pricing and paying cash. Instead of buying cheap ships in the market they would rather build high spec vessels that are representative of the brand the company has spent decades building. Throwing a bunch of crappy vessels in the fleet would totally undermine things.
It can be done but the companies leadership has to be focused, smart and have their ego’s in check. A lot of companies that fail don’t have these 3 things.
Seacor’s bonds, which are a reflection of their credit are rated as junk.
Who knows about Chouest? They are a private company and last time I counted which was several years ago was divided up among 70+ llcs. Whether any make money is anybody’s guess as they are all privately owned. It is a given that Gary Chouest and his family are rich but that doesn’t make any of their companies profitable and that probably suits them. If I owned a company that makes 1 billion dollars a year, owes 5 billion and pay myself along with my offspring 900 million that would make my company not so valuable but it would make me rich.
The best Maritime bankruptcy attorney in the biz is Stewart Peck in New Orleans. Anybody who thinks guidry made out bad really doesn’t know.
I don’t think anyone here thinks Shane Guidry came out on the bad side of this deal. Most folks think he screwed over a lot of people and is a crappy human being.
And Stewart Peck is a really good maritime bankruptcy lawyer.
But your reply doesn’t disprove my previous message that there are people/companies that can make money in the long run in the supply boat business.
A few people maybe, companies no. As an experiment, go back 20 years and list the companies in the supply boat business at that time along with their stock price. Invest $1000 in each at that time. What would your investment be worth today? At least half the companies of 20 years ago don’t even exist now, but their ex CEOs are doing just fine. See Harvey Gulf for a recent example. Tidewater, once the largest supply boat company in the world, is another example, there are many others. My point was why invest in a supply boat company when you can invest in the company that hires them? Who has the deeper pockets and controls the business? Which one controls the contract?
This is actually a great time to invest in supplyboat companies and/or buy distressed supplyboat assets. Keep a tight rein on the bayou mafia management to prevent the from looting the company. Just make sure to sell and cash out before the market peaks again.
There’s plenty of surplus laying around the last time I checked.
From todays TW:
US Chapter 11 process is creating mean and lean shipowners
March 14th, 2018 23:00 GMT
by Darrin Griggs
Published in Offshore
Private shipowner Harvey Gulf International Marine has joined the ranks of two debt-slashing US-listed companies by swapping about 70% of its loan amounts into equity through a pre-packaged Chapter 11 restructuring.
Harvey Gulf’s creditors are swapping close to $1bn of debt — out of about $1.22bn in total — in exchange for equity, while issuing a new “exit facility” of $350m.
Harvey Gulf uses Chapter 11 to slash debt by 70%
Read more .
The move is set to cut the US shipowner’s net interest expenses from about $67m in 2017 to about $48m this year, and then down to the $30m range up until 2021.
GulfMark Offshore and Tidewater have been praised by analysts for slashing large amounts of debt through Chapter 11. Both are viewed as having a competitive advantage against owners with high debt.
Tidewater emerged from its restructuring process with net debt slashed from $1.3bn in 2017 down to zero, while GulfMark came out of its reorganisation with net debt of just $15m, down from $475m in 2016.
To put these US examples into perspective, a stark contrast can be drawn with many offshore owners in Norway.
The Scandinavian nation does not have an equivalent of Chapter 11, so options for struggling owners are either out-of-court agreements or outright liquidation.
This has created a situation over the past few years that many in the industry refer to as “amend and extend” restructurings, where relatively little debt has been removed.
Based on four listed Norwegian owners, the average debt on a single 10-year-old, 5,000-dwt platform supply vessel stands at around $26m, according to Turner Holm, managing director of equity research at Clarksons Platou Securities.
Guidry sees smaller slice of a larger pie
Read more .
Based on this high debt, one of these PSVs would need to earn an average of about $24,000 per day, at 85% utilisation, from 2020 to 2032 to cover operating expenses, amortisation, interest and maintenance capital expenditure.
Holm points out that this is $2,000 per day more than the long-term average for this specific class of ship from 2006 to 2017, which includes the market’s boom years.
“Shareholders?” What exchange do they seem to think they trade on??
Anybody or any corporation that has a stake in a company is considered a share holder.
Also if one has the right contacts and enough money you can trade shares of non public companies. Kind of black market thing, but is legal as long as one is considered an Accredited Investor by the goverment.