John, hello
Message 9479306
This was Razor's take using the Altman model back in May, and things have not substantially changed since.
The Company recorded a net loss of $12.8 million for the three months ended March 31, 1999 (from the latest 10-Q form)
Extrapolate that to 4 quarters and you get $52 million a year net losses. Not so good when you consider that they have about $25 million in cash and about $19 million available in their $70 million revolving credit facility. The creditors are already giving them the fish eye, and have begun decreasing the limits on that revolving line of credit.
This extrapolation should not be that far off when you consider that their prospects will not change substantially in the next 3 quarters, even if we are in recovery. Any savings which are realized by consolidating offices, layoffs, or other administrative measures will help - but only as a drop in the bucket.
If you read the 10-Q form closely, you will find many references to additional financing which may be impending, a reference to non-compliance with the company's debt - equity ratio covenant. All of these are things which strike fear in the heart of a financial executive.
I hope that Parker does not go under, as they are a long-established company. But I wouldn't be putting money on it.
By the way, the Indonesian operations involved mostly geothermal drilling under the old Suharto regime, which largely fell to pieces in May '98. I was there at the time and remember that all drilling on these geothermal wells stopped within a week or so, and the service companies really scrambled to recover their equipment - it was an industry-wide shutdown. They (Parker), along with the rest of the service companies associated with those ventures, will never recover those outstanding fees. Some of these companies are owed in the 10's of millions.
Regards and Good Luck,
Aggie |
