 Hi AE
It is in two bits which I don't think should be confused. The performance bond injection is a loan/bank guarantee which is to be replaced by SRT's own money (what's that?) and a UKEF performance bond. If that UKEF bond comes through, SRT are effectively giving options at 35p on 20,000,000 shares to OI for three years, increasing by 20% each month after 6 months. That is quite a cost for a 6 month loan. Of course, SRT hasn't got $21.3 million and never has had, but if they think they can replace it in six months why not factor that into the contract with Kuwait?
The other part, the £7.5 million, is quite simply because they have run out of money again, mostly because it is tied up in stock. It is a shame that the AGM isn't going to be in early December as I would have tried to make it (and vote most vociferously against quite a few things) but it sounds like they won't be able to pay the electricity bill if they don't get an injection before the end of November.
I suppose they will have to issue some sort of forecast with the offering document which will give some sort of clue as to the most recent expectations of timings on these other contracts. And the much awaited 'annual' accounts which will show that they had a dire year and had a need for funding regardless of this Kuwait contract. |
Can I suggest that people look up performance bonds, as it seems there is some misunderstanding, particularly on who is liable for payments in the event of a claim.
Its just insurance, but you can’t get it if your financials don’t stack up and if they do, the cost of the bond will depend on how good they are. The value of the bond is not a liabilty for the contractor, just as you don’t have to pay for a new car if you crash yours.
There may be complications in negotiating the ins and outs of what has been completed on the project in the event of claims. |
On the announcement of the Kuwait contract the RNS said
"The award is subject only to completion of the formal contract and associated performance bond which are now underway and expected to be completed prior to the end of next month, with implementation commencing immediately thereafter."
It seems pretty clear to me that this funds raise is to satisfy that requirement and not for any other purpose. Of course the project has to deliver what has been specified or the bond will be subject to forfeit. |
YumYum
No I don't think I misunderstood. I think he meant that performance bonds were always called on by the purchaser on some pretext or other, meaning that the contract should be valued net of the performance bond money. i.e. a delayed discount. He did also say that it was back in the day and things might have changed since. |
LaValmy, you might have misunderstood extrader, but anyway in this case it looks like a more normal performance bond rather than dressed up financing. |
Am I right in thinking that there will be 262m shares in existence plus any extras if UKEF don't deliver in 8 months ? That's a lot more than when SRT was going to conquer the inland waterways. And why is UKEF taking so long ? Wasnt that a next month thing ?Share price 40p. mkt cap 100m plus. Have to pay back the OI loans, plus the Cayman island loans. And also assume cost over runs by the local contractors in the countries involved. Do the contracts also include a maintenance aspect over x years ? If so, that is good for the long term but needs to be deducted from short term contract value.Wonder how much profit, free cash flow and EPS are expected over the next few years. Everything will be lumpy, and will probably require a different level of mgmt so perhaps the best thing is a takeover once the 4 contracts have actually been started. Crystalize the gains. |
YumYum
It might indeed be good news about Kuwait starting, but I have my worries about this performance guarantee. As was pointed out by Extrader, it can be merely a postponed discount. SRT have been hopelessly naive about a lot of things over the years. I think they got in an expensive muddle with Saudi VAT for example. We can but hope that they have gone into Kuwait with their eyes open. |
I wonder if next quarter really means Jan-Mar 2025 or actually this quarter.
The very good news is the expected signing and start of Kuwait contract in only 3 days' time. |
It's fantastic news (if it holds true), If the $210m contract is signed on 31/10 then we'll fly, the funding will be done and we'll have the first major contract in the bag.
That proves to the market that the product is real and the market is huge |
At a glance, there are a couple of things not to like. OI is getting to a 25% holding (give or take with the expanded capital) at the low price of 35p. That clearly gives them the power to block certain things, which may or may not be good. That they will have someone on the board I regard as a good thing. He might stop some of the nonsense that has gone on.
The other point is 'proceeding of three other contracts worth an additional $210m during the next quarter' which I take to mean that none will start this current quarter rather than $210 million recognised next quarter. That is very disappointing and we can only hope that OI has done very thorough due diligence on these. |
In one way it is pretty horrible for SRT but on the other hand it does provide very much needed cash and a sort of clarity going forward. Kuwait contract start is an absolute plus. I think overall it is very reassuring. I am glad I did not buy more whilst wondering about placing, but I will try and buy in the placing in November. I might buy today as well. Chewing on that. 7.5m shares in the open offer is not very many. |
Looks good 🤞 |
SRT Marine Systems plc ('SRT'), a global provider of maritime domain awareness systems and technologies for security, safety and environmental protection is pleased to announce that it has agreed a substantial investment and short-term finance bridge support package from existing shareholder Ocean Infinity (OI), together worth approximately £31 million.
RNS just out |
Getting old :¬( |
Hmmm. I don’t like interesting weeks. |
I am considering adding more SRT shares to my existing holding. There's some uncertainty in what the 'Annual' report and final results will reveal. It's a bit of a teaser! Share trading volume has been low this last week. It could be an interesting week next week. |
Whoever said 37p - looks like a good buying point - probably next week as there is pre-budget (and US election) panic in the ranks today. |
My cousin has just returned from scuba diving in Malaysia.His instructor was a marine biologist who told him they needed to protect their fishing waters. He specifically mentioned SRT and when I mentioned SRT to him on our Lakes walking this week he told me of his conversation! Quite a coincidence! |
What excellent contributors this thread has. One of the best I have read. Thank you. |
Visitors to this site, together with the rest of the market, await the start of the four systems contracts. Obviously knowledge of starts is price sensitive information. Most of us will only learn by RNS. However, if for some reason a planned launch is not going to happen, an immediate RNS is required. |
Most people recognise the input of Mr T. However, when the cash flow allows debt to be repaid, the Board has a duty to spread the load at the top. Increasing numbers and sizes of contracts require a broader based team. This is the logical growth of a company moving to the next stage of its journey. We are a few days from that long awaited inflection point. |
I’m reading the posts today and can’t help feeling all are looking too far forward.Things will change as and when contracts are signed, then delivery which isn’t a given due to location and scale up issues.
The other issue is ST-there would be no business without him so he needs to be locked in |
Perhaps somewhat timeous ?
FT Headline today
Indonesia says it drove Chinese coastguard ships out of disputed waters
Beijing’s sweeping maritime claims and muscular enforcement actions have been creating friction in South China Sea
Let's hope it helps people focus !
GLA |
‘The options vest at £3. They cost nothing.’
Yes, true, hence my suspicion they are just a bit of window dressing and if & when SRT get taken out, I bet there’s a take out clause re those options & it sure won’t be £3.
Which I would fully agree with, as Tucker here is the driving force and done an incredible job.
Agree with your take re SRT becoming entrenched etc, which is why we won’t see a take out at an acceptable level in CM’s imv wildly optimistic time frame. |
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