Shares in struggling transport group McAleese Corporation remain suspended despite the company finally reporting its December 31 financial results to the ASX on Tuesday evening. The interim results revealed another big loss after write-downs and impairments – this time $97.4 million.
Trading in the company’s shares were suspended in late January at the company’s request while it conducted a strategic review and associated refinancing discussions. That suspension was extended on March 7, and the interim report and review update delivered just after 6pm on Tuesday.
That $97 million loss was on top of the total loss for the 2014-15 financial year to June 30 of $90.9 million, meaning the company has racked up losses of close to $200 million in the past 18 months – or more than $60 million every six months.
The company reported earnings before interest, tax, depreciation and amortisation of $6.7 million (before individually significant items) on revenue of $285.0 million. The pro forma trading loss after tax was $14.6 million, excluding the impact of significant items. The statutory net loss after tax was $97.4 million.
"The statutory loss after tax of $97.4 million includes non-cash impairment charges of $50.1 million in relation to property, plant and equipment, with the post-impairment carrying value of property, plant and equipment reflecting the higher of ‘value-in-use’ and ‘fair market value less costs of disposal’ for each cash-generating unit.
"In accordance with the Company’s accounting policies, the carrying value of the Oil & Gas division is based on ‘value-in-use’. The carrying value of all other divisions is based on ‘fair market value less costs of disposal’. The statutory loss after tax also includes an $8.3 million impairment charge against the carrying value of the Company’s investment in Atlas Iron Limited shares,” directors said.
Looking at the half year, the company said, ‘The result for the half reflects the continuation of challenging market conditions, with key commodity markets serviced by the Company experiencing weak and volatile conditions and the capital projects pipeline in the resources sector remaining subdued. The difficult trading environment saw a 17% decline in revenue from the prior corresponding period (excluding revenue from Liquip International and Beta Fluid Systems which were divested during 1H FY15),”they said.
In a separate statement on the review and refunding, directors said the company had received a number of proposals which “remain confidential, indicative and non-binding… the Company is working with a select number of parties to finalise binding proposals that are capable of acceptance by the Company and its financiers.
"If the Strategic Process is successfully concluded, it is expected that the Company’s financiers would agree to sell their debt to the successful party. As a condition to any purchase of the debt, it is expected that there would be an agreement between the successful party and the Company to reduce the amount of the debt by way of compromise, with the revised debt to be on new terms agreed with the Company.
"The recapitalisation would also be conditional upon an underwritten equity component, most likely a rights issue, the terms of which remain under negotiation. In combination these steps are intended to provide a sustainable capital structure for the Company. There remains no certainty that the Strategic Process will yield an outcome.
"As further negotiation is required in relation to each of the proposals, the effect of the proposals on McAleese Group’s shareholders remains uncertain, however, the enterprise valuations attributed to the Company by each proposal are materially below that implied by its current market capitalisation," directors warned shareholders.
At 5.8 cents a share, the company had a market value of $16.4 million, and it said net debt at the end of December was $188 million, giving an enterprise value of around $204 million. That means these refinancing proposals have a value less than that, which means another round of losses for shareholders and for some of its existing financiers.
