More negative developments but company says investor backing is firm
MMA Offshore is struggling to get an even break with more tough news going shareholders’ way as low energy prices take their toll globally.
The energy industry logistics firm has copped a suspension of a key Southeast Asian contract and a “significant” vessel rate reduction from a Middle East client.
Both outcomes are expected to cost the company $10 million in earnings before interest, tax, depreciation and amortisation (EBITDA).
“Whilst it is early in the new financial year, it is not clear at this stage whether the company will be able to recover the potential earnings shortfall having regard to current market conditions – although MMA remains focused on doing so,” MMA says.
“MMA is in ongoing dialogue with its banking syndicate who continue to be supportive of the company in what is a very challenging market.”
The new blows come 10 days after it said it expects to book a non-cash impairment charge of approximately $140 million before tax against the carrying value of its assets as at June 30.
“The impairment charge reflects the ongoing impact on the company’s operations of the low oil price environment which has led to a significant reduction in oil and gas related activity in both the Australian and International markets,” it said.
The impairments are:
- $3 million against the carrying value of the Dampier Slipway
- $37 million against the carrying value of the Dampier Supply Base
- $100 million against the carrying value of the company’s vessel fleet.
The most recent news helped bloc the momentum of a share price resurgence that followed the impairment announcement that had seen it rise from 29.5 cents per share to 36 cents and it is now trading at 34 cents.
MMA had warned the market on June 16 that its 2016-17 financial year outlook was bleak
due to what it sees as an unprecedented downturn in the energy market.