Harland & Wolff Share Discussion Threads

[loglorry1] 04/1/2024 14:40

So HARL has borrowed a load of money, booked massive losses and is now skint again and can't fulfil orders it's taken on. You are drinking the koolaid if you think IM is worth more than £5m. Its a paper project.

If there was so much valuable investment in infrastructure going on why are there almost no tangible assets?

[linesal2] 03/1/2024 14:59

In 2017 we only had Islandmagee which as we all know had the protestor issues, but now in the coming weeks/months having passed the appeal process from the tree huggers the value may be realised circa £50-£200m?.

We purchased Harland & Wolffe in October 2019
we then purchased Appledore in August 2020
and purchased Arnish and Methel in February 2021

So since acquiring the assets, we have had to improve the facilities and win contracts.
so 2 years to get the sites up to spec and win substantial contracts worth over £1BILLION is quite a good achievement and a great basis on which to grow, Belfast is going through expansion as we stand today, one of the biggest shipbuilders in the world is passing its knowledge onto our workers. £70million has also been granted for state-of-the-art improvements for Belfast via the FSS contract win.

So taking the above into account HARL is very new and moving quite fast.
The share price will eventually catch up without a doubt IMHO

[loglorry1] 03/1/2024 14:33

It's not a young company. It's been heavily loss making since at least 2017.

[linesal2] 03/1/2024 14:00

Loglorry, every small business needs financing in their early years, HARL is not making cakes or sandwiches that require initial low cash to start, they are building/maintaining/repairing High-value vessels that require High initial cash to service the contract. nobody pays upfront, This is a cycle, hence profitability being in 2025, they have over £billion in contracts and the £200m financing will ensure they can service them to payout, as the process continues they will be less reliant on financing and the free cash flow will increase.

[loglorry1] 03/1/2024 13:48

"Loglorry, you don't seriously believe that as of December 29th the company still expected to close the financing in 2023."

You miss my point. The statement is entirely vacuous as it all depends on when the directors expect a refi to close. They also by the way don't say when that assumption is.

It's pretty easy to say you have enough cash if you expect £200m to arrive on Valentines day.

[loglorry1] 03/1/2024 13:43

I'm sure UK Gov (Labour or Conservative) will want to see HARL survive and thrive as do I. I'm not sure why any Gov would allow Riverstone (and current equity) to walk away unscathed and bailed out by new funds backed by the government. Riverstone and equity holders are looking like chumps for backing HARL. Why should tax payers foot that bill and make them whole? Can you give me any examples where that has happened?

They may be willing to back an UKEF loan once Riverstone has been swapped to equity and the balance sheet restored. This makes much more sense and is exactly why UKEF has to look at each situation and make sure they make lending decisions on a commercial basis.

Also I'm not sure where your argument ends? How much bailing out does UK Gov have to do each time jobs are in danger? I think really what you want is the UK Gov to make your shares worth a lot more.

As a tax payer I've no problem with the Gov backing loans as long as the existing investors both equity and Riverstone take a lot of pain first for their bad or unlucky decisions.

[xenor] 03/1/2024 13:41

JakNife, having the ability to request early repayment is a lot different than "the loan is due April 2024" when it actually matures end of December 2024. Without knowing the details on that early repayment thing I can't comment. Usually if a loan is called in like that it is because of a default. I think they would only request early repayment if they felt the loan would not be paid back. It's debatable whether all of HARL's assets would cover the debt so they are better off waiting for the new loan to complete and get their money back quickly and easily. In the meantime they are accumulating high interest on it. Should the loan not go through the assets are still there. Arguably the assets are worth more as time goes on due to the yard upgrades and as the IM court process plays out. They have nothing to lose by waiting it out, and nothing beneficial by calling it in early and forcing the company into liquidation. It defies logic. Loglorry, you don't seriously believe that as of December 29th the company still expected to close the financing in 2023. For me, that went out the window with that RNS. The statement even mentions cash flows in 2024.My assumption on the finance is that we were offered a package in 2023 and JW turned it down in favour of waiting for a better one. I am sure he mentioned this in one of the LSE interviews. I am happy to wait for the proposed deal, as annoying as the delays are as it means having to listen to people like yourself playing on fears of financial difficulties for the foreseeable.

[linesal2] 03/1/2024 13:35

Can you see the conservative government not helping HARL get its financing?
They just gave them a £1billion+ plus contract which will boost growth and prosperity in Northern Ireland, It would be political suicide for the Conservatives (or Labour)if this company was not shown to be a success, They will do what it takes to grease the wheels for HARL (and I am not talking bailouts etc). It is in their interests to help HARL become a massive company employing thousands of people and training thousands of kids for the future. Watch and learn.

[loglorry1] 03/1/2024 12:11

Yes JW did say the Riverstone was due in April (at their behest). Having said that I'm not sure Riverstone have much choice but to extend it.

[jaknife] 03/1/2024 12:00

Xenor,

"You are also incorrect that the Riverstone loan is due in April. As per the RNS in September (which you clearly missed when blogging about the company imminently running out of cash at the end of 2023 (I hinted at it on here at the time and you still couldn't find it) ), the loan is due end of 2024. This can also be extended."

The loan has an early repayment clause under which Riverstone can request early repayment. I confirmed this with John Wood at Mello back in November - Riverstone can request early repayment in April.

JakNife

[loglorry1] 03/1/2024 11:47

Xenor each to their own but I think you need to be very careful reading this sort of statement.

"Through a combination of cash currently held on the balance sheet and expected cash flows in 2024 generated from existing contracts, the Directors consider that the Company has sufficient funds to meet its working capital requirements until the new loan facility is completed."

At the time this statement was made the company "expected" to close the refinancing before 2024. That hasn't happened (but they do have permission to apply :-)).

So "until new loan facility is completed" means they believe they have sufficient cash until 2024?

[xenor] 03/1/2024 11:43

Loglorry, I am more inclined to believe the words of the CEO than the words of a shorter. As per recent RNS."Through a combination of cash currently held on the balance sheet and expected cash flows in 2024 generated from existing contracts, the Directors consider that the Company has sufficient funds to meet its working capital requirements until the new loan facility is completed."My estimates are based on known contracts that back up the statement above.You can make up whatever you like to paint a bleak picture but the fact of the matter is that the CEO believes there is enough cash flow until the loan completes.Totally understand that contracts need a lot of up front capital. Hence the high debt to begin with. That debt then becomes cash again when the contract payments are made and that is used as working capital for the next stage of the contract, or other contracts. I guess the concern for some may be we don't have the capital for the new Sea Rose contract, but the CEO is on record saying we do. That's all that matters.A business update would be nice to see and provide more confidence.

[xenor] 03/1/2024 11:33

JakNife, you have made the fundamental mistake of confusing net debt with cash flow. As I'm sure you are aware, the interest on the debt is being added to the debt total rather than being paid from cash flow. The whole lot will be paid off when the new loan is signed.You are also incorrect that the Riverstone loan is due in April. As per the RNS in September (which you clearly missed when blogging about the company imminently running out of cash at the end of 2023 (I hinted at it on here at the time and you still couldn't find it) ), the loan is due end of 2024. This can also be extended."The Company upsized the Facility on 1 March 2023 to a total of $100 million, with the entire Facility maturing on 31 December 2024. "I have not seen any further news revising this date to be earlier.

[loglorry1] 03/1/2024 11:19

"We were expecting around 60m in H2 2023 given the revised revenue guidance, and we have a 61m contract to start and complete in H1 2024."

I see JN has posted but I don't see where you are getting these CF numbers from. Engineering companies book revenues from contracts as they progress. They are allowed to book some revenues in advance of even starting and is some cases they do get pre-payments before they start work. However the revenues and cash flows are not well aligned and final payment is almost always once the contract and work has been completed.

If you could point me to where JW has given these cash flow estimates that would be helpful. One of HARL's many problems is that to complete the large contracts they need a lot of working capital. This is precisely because the cash flow from contract payments significantly lags booked revenues while large costs are upfront e.g. materials, staff costs etc.

We don't have any real visibility on cash flows but the broker is pretty clear about the loss making nature of their activities and there are 1,000+ staff members to feed.

The death of these companies is always the same. When their credit is pulled it's game over. See the demise of Carillion CLLN for example

[jaknife] 03/1/2024 11:12

Xenor,

"We were expecting around 60m in H2 2023 given the revised revenue guidance, and we have a 61m contract to start and complete in H1 2024. We also know the M55 contract will complete in H1 2024. That should be an extra 20m or so. There will also be more barges and other work in H1."

You've made a fundamental mistake of confusing revenue and cash flow.

Net debt at the end of H1 was £88.5m as per the interim accounts:



HARL's house broker (Cenkos) forecast that net debt at the end of Dec 2023 was going to be £114.4m. However, that was before the profit warning that HARL was forced to announce on 30 November.

That means Cenkos forecast negative cash flow in H2 of 2023 of $25.9m but it was probably worse.

Cenkos have also forecast net debt at the end of this year will be £142.9m so they are predicting further cash burn of £29.5m in 2024. But again, that was before the profit warning and HARL have been pretty poor at meeting forecasts this year.

The Riverstone debt facility is due to be repaid in April.

JakNife

[xenor] 03/1/2024 10:25

I am basing my figures off of expected cashflow from contracts. Same as JW's statement in the RNS about cash flow.We were expecting around 60m in H2 2023 given the revised revenue guidance, and we have a 61m contract to start and complete in H1 2024. We also know the M55 contract will complete in H1 2024. That should be an extra 20m or so. There will also be more barges and other work in H1.Hence I am not concerned for the next 6 months. H2 2024 I am less confident about until we sign more contracts. So whilst I agree with the broker that 2024 may be loss making, I figure those losses will be weighted towards H2 due to the revenue estimations.

[loglorry1] 03/1/2024 10:08

Xenor its taken a bit longer than I expected but its clear that they need to do the refinancing very soon and have made no progress on it in the last year.

I'd like to see your numbers as to why you think they have a further 6 months of cash burn.

Debt Projections

31 Dec 2023 Net Debt £82.5m

01 Mar Took $25m to go $100m on existing facility
Broker calcs £38m loss FY23 & £25m FY24
£20m Deferred Interest FY23 & £25m FY24
£82.5m+$25m+£38m+£25m+£20m+£25m=£211m (beginning of 2025)

[owenski] 03/1/2024 09:55

Oh dear, shouldn't this be rocketing up now that they've put out an RNS which confirms they've got no money but at least spoke to someone about it and they've agreed that they've got no money but should officially talk some more about it.

[xenor] 03/1/2024 09:50

Loglorry, you have been saying HARL is "desperate for cash" for over a year now. Give up.I am reasonably confident that even if the loan were to take another 6 months that the company will not run out of cash. I have done my research. But I see the loan coming soon as the slow bits have been done.

[loglorry1] 03/1/2024 09:16

Why do you think the UK gov is backing any lending to HARL? The RNS clearly states that HARL has been given permission to apply for UKEF. This is not the same.

It's also very clear that John Wood (CEO) has been telling all sorts of porkies about how advanced this application is. They must be absolutely desparate for cash now and as yet nobody is prepared to give them a bean.

[linesal2] 02/1/2024 19:48

But the government is backing her, and we are in an election year! Foolish to back against her in my opinion...

[john mcinnes wood] 02/1/2024 15:01

....and the RNLI won't be there to bail her out(long term holders will understand).

[loglorry1] 02/1/2024 14:17

... and back down she goes.

[linesal2] 01/1/2024 12:50

Happy New Year all holders.

I am hoping for a rebound in UK stocks in 2024, we have been behind most other countries' indexes for quite a while. With all that has happened since 2016 to the pandemic and war in Ukraine forcing up inflation, the majority should be behind us with inflation coming down fast, and Andrew Bailey SHOULD be reducing interest rates to save a recession and once again allowing the smaller businesses to get decent loan terms. This should see big gains for smaller companies making it a lot harder for shorters. I predict Financials and property to do well and opened some big positions on some FTSE250 companies in November. So fingers crossed for 2024.

[petewy] 31/12/2023 17:54

Impolite loglorry. Give us some tips...


do I biuy in or not?