Dejo por aquí un comentario/análisis muy interesante de Golar que está perdido entre los comentarios de Seeking Alpha, por si puede resultar útil y para que no se pierda:
Great analysis, and Golar has an absolute excellent story to tell as it talks about the strong profitability/projects it's investing in, both in terms of profit margin, and the fact that these projects are largely long term fixed contracts with a little bit of currency risk at the margins which can always be hedged.
However, investors must also understand that this presentation, combined with the 20-F, Q2 financials, and now the most recent 6-K posted today also highlights the growing likelihood of liquidity risk / covenant breach that GLNG faces by the second half of 2020 and into 2021. Since we do not yet have the timing of when GIMI's equity capex payments are due within each quarter, but just on a yearly basis, I will look to forecast liquidity through 2020E, but readers must keep in mind that Q1 and Q2 tend to represent significantly weaker seasonal earnings from the LNG fleet, so if GIMI's 2020E equity milestone payments from Pg 5 are first half weighted, problems could arise sooner as weak revenues may co-inside with large capex payments.
It is also important to once again note that what I am describing is a slowly melting ice-cube, not an imminent crisis, and this only occurs if there is no spin-off of the LNG fleet that fully separates it without a PG back to GLNG, and doesn't bring in any new liquidity as part of the spin, OR that a cash infusion from a Hilli T3 deal remains elusive. Management is working on both of these. As you read through the below financial implications, my bottom line argument I have is, why own shares today, in the face of mounting pressure. If and when GLNG announces Hilli T3 or an accretive spinoff of the LNG fleet, I don’t believe the stock trades immediately back above $15, but either event likely means a substantial portion of the growth case is in play, e.g. TEV above $30/sh as GIMI and other projects deliver. That's the upside risk I'm willing to miss, I could be wrong, I just feel that substantial upside will still be on the table, whereas, until that news comes (which it may not), the longer we wait, the more the pressure will likely increase and pressure the stock lower. Also, consider that it’s unlikely that the LNG fleet spinoff occurs in Q3, especially as 3 vessels are under DD, a new buyer would just wait for these vessels to be re-positioned in their natural trading lane. Furthermore, it is possible (I feel likely), that as part of the LNG spinoff, banks will require new equity be raised in order to remove any cross default provisions, or guarantees back to GLNG, which in this market is again possible (I feel very strongly) that will only occur on terms which represent a significant discount to NAV, in turn reducing GLNG's TEV.
Okay, let's get started:
(1) Current Cash: GLNG has $320mm of unrestricted cash post quarter end, after accounting for $150mm from a new TL, and $30mm released by amending the $100mm Margin Loan which had $30mm restricted cash on it, into a $110mm revolving loan. Two very important details to highlight the first is that the TL is only a 15mth facility!!! (Page 41 of today's 6-K). Why so short... everything basically lines up right in time with GIMI conversion completion so that project has to go off without a delay. However, now knowing its only a 15mth term, I am only more convinced that (1) TRS unwind was bank led, (2) the 6mth dividend suspension is likely a pre-curser to a full removal throughout 2020, and (3) mgmt. is proactively and conservatively building as much liquidity as possible behind the scenes without calling attention to it, to fend off a potential liquidity/covenant pressure banks may have if none of those in-process corporate actions occur and we have another terrible Q1, Q2 next year. I will write an entire separate post on why I am not yet satisfied on what I have seen surrounding the Margin Loan. Lastly note that per the 6-K, the proceeds from the $150mm TL have not yet hit the company, so it's still under documentation at a time when GLNG's market value based leverage has shot up from ~1.4x during Q2 when the stock was at $17 to >2.2x today post close. I will also write a separate follow-up on covenants.
Anyways, let's just stick with $320mm unrestricted cash post Q2.
(2) Cash Inflows: Page 6 shows $187 of LTM EBITDA, based on $46k/d. I multiply this by 1.5x to account for the next 18months, and then add another $120mm ($20k/d) to account for the fact that the next 18 months accounts for 2 seasonally stronger winter periods and only 1 summer period for a total of $400mm. To this $400mm we must further add Sergipe FCF of ~$42mm based on current currency. (If you wish to tie to this number, see the Pareto slide deck from Oct. 2018 where they break out FCF from Sergipe, not just EBITDA of $99mm, and note that $47mm is based on 3.7 BRL/USD). In total I’m at ~$440mm of cash inflows.
(3) Now onto cash outflows to account for existing financing costs, dividends, and GIMI equity capex.
Interest in Q2 was $25mm. I’m just going with this to get to $150mm due over the next 18 months, event though TL comes on. Shame on me and my laziness (I hope the bulls can at least appreciate a nice joke here and there).
Next 12 months debt paydown is ~$150mm per Appendix A from Q2 financials. Add to this so amortization on the Term Loan as its only a 15mth facility… I think $40mm/qrtr or $240mm over 18months is safe, but could be wrong, to which I tip my hats off to GLNG finance team.
Add to this $30mm from TRS unwind and another $75mm as per mgmt., the dividend should be re-instated for Q4 which technically means 5 payments until 2020E, totaling $105mm.
Again, a dividend cut is a negative event vs. what mgmt. has currently stated their plan is and this overhang will likely keep the stock rangebound – thus, why hold until we get some positive news.
Now to the big one, GIMI equity capex… GLNG must fund $149mm between now and 2020E.
In total, funding outflows are as much as $650mm. Compared against $440mm of inflows, and thus barring asset sales, Hilli T3, cash from LNG spin on an accretive basis, I think there is a very real prospect that GLNG has <$110mm of unrestricted cash by 2020E.
Now we must account for a few wildcards… what is the net debt drawdown on the TL (any restricted cash requirement, loan fees). Also, Avenir may require another +$10mm of funding commitment, look at today’s 6-k vs. the 20-F which says GLNG is committed to funding $18mm to that venture, and possibly only $8mm funded thus far? (I'm not so sure). Also, per my very detailed note on the margin loan, a drop in GMLP’s stock may cause a drop in liquidity to GLNG.
On the positive side, GLNG will receive $30mm of cash once the Viking conversion delivers but that is set upon delivery at the end of 2020E. Also, the Arctic a 16yr-old LNG vessel’s debt is due this year. Very likely they either do a similar transaction as the Viking, OR, if I’m right on liquidity, may instead sell it outright. With $55mm of debt currently and a FMV of $75mm, if they sell outright, this is another clue that liquidity will be tight next year because instead of choosing to take that same liquidity upon conversion completion (like Viking) AND receive L/T operating fees going forward, they instead chose upfront liquidity.
Anyways, all of this is to once again say – GLNG’s future prospects throw off a ton of cash, but they have an increasing funding gap risk before GIMI delivers. Why not instead sit on the sidelines and wait for Hilli T3 to be sold. The stock is unlikely to immediately spring back to the upper teens by then, so you still have a great upside case, but at least you aren’t continuing to hold something that is much more likely to work against you until that date which may never come.
Lastly, a note to all the people that keep getting pissed at how much I’m pounding the table on this one point. This isn’t about liquidity today, it’s about how bad liquidity could get in 2020 and 2021, and the likely pressure that banks will apply if not addressed before tripping the $50mm unrestricted liquidity covenant (I will address covenants separately). If you want this to stop, please use numbers sourced to specific pages/tables in filings to contradict my point. Too much stuff that talks about future value, future projects, not what is here and now - and always always remember the tail of how the 6ft man drown crossing a lake with avg. 2ft depth. At every turn that I have given these numbers, I source them, and to specific pages, I am totally okay being wrong on liquidity but no one has truly demonstrated that yet. A dilutive fleet spin/sale, or preferred capital raise will crush the upside.
Now onto the Margin Loan – I am not yet satisfied. Both the original and amended loan agreements, exhibit 4.27 (dated March 3, 2017) and exhibit 4.1 (dated July 20, 2018) do not actually spell out the LTV ratio for GMLP shares before this creates a margin call. All the negative covenants essentially tie back to defined terms which are defined to be described in the "Letter Agreement", which was not attached in either 6-k, or as an exhibit in subsequent quarterly or annual filings.
This comment is mainly for really detailed lawyers, isn't there a filing obligation for this? Look, it's totally fine if I missed it, I just want to know what the threshold is before a margin call, particularly as it relates to the newly amended loan.
The reason I care is because collateral is 21.2mm shares on GMLP stock, which as recently as 3months ago was worth >$250mm collateral value. Today, it's worth $204mm, and we're now talking about potentially up to $110mm outstanding on the new amended facility for >50% LTV, vs. the net $70mm cash outstanding previously, so the LTV (deducting restricted cash) on the margin loan has increased from 28% to >50% in 3 months if fully drawn today.
I can only assume that the LTV % will become an increasingly important factor now that the margin loan is revolving, as the amount able to be drawn at any one time is likely to be tied to that %. If S&K is reading, can you please include the "Letter Agreement" if and when this new and amended margin loan gets filed. A pervasive drop in the price of GMLP (which might occur if sayyyy a 16% dividend yield were to get cut, just saying...) could have a knock-on effect to GLNG shareholders as it may directly impact up to $110mm of liquidity, this is why I am going through painstaking detail to highlight this seemingly small data point.
Lastly, full credit to @J Mintzmyer. So far he has the best rebuttal I have seen as it relates to funding gap risk. To summarize (it’s buried in Henrik’s long comment thread):
(1) GIMI capex is more than covered by current unrestricted cash and HILLI cash flow - correct
(2) TFDE fleet spin off/JV will remove a further $1.0bn of debt and $1.3bn assets off the B/S. - correct
The issue is, I do not think the spin happens in Q3. 3vssls still undergoing drydock, so a buyer would be better positioned to let that complete and the vessels get into their regular trading lanes.
The bigger issue is a practical issue around valuation. With so many pureplay “asset-cos” trading at material discounts to NAV, and this one would be 3x levered - where would this price today? I can only assume given its implied leverage, banks won’t just let GLNG spin this off without a parent guarantee back to GLNG, so this new entity will also need sufficient liquidity buffer, which would likely be highly dilutive today. (Which hurts TEV).
Y por último otro artículo, basado también en los datos de la ultima presentacion:
https://seekingalpha.com/instablog/379412-darren-mccammon/5348262-calculating-roe-golar-lngs-visible-projects
