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Strategies & Market Trends : Bankruptcy Predictor Model

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To: Greg Jung who wrote (107)	3/20/1999 4:33:00 PM
From: Mad2	Read Replies (1) of 477

Greg I would respectivly suggest that quarterly numbers give us the best snapshort of the current situation. I do know that the oil industry is cutting back E&P significantly in 99 compared to 98 and prior years. The less they spend the less revenue is available for drillers and companies such as HMAR. Concerning the debt service, from my read of the financials only a portion (the 6.5% conv that pays $3.25 per share with 2.3 mil issued) can be defered. That amounts to around 1.9mil per quarter. Total debt service in the 3 qtr of 98 was 11.8 mil On top of that they have a number ov vessels comming on line in late 98 and 99 The following table shows delivery dates and estimated costs for vessels to be delivered during the remainder of 1998 and 1999. Remaining Expected Total Cost Cost at 9/30/98 Vessel Delivery Date (millions) (millions) 1 45,300 dead weight ton double-hull product carrier November 1998 $ 25.9 (1) $ -- 1 205-foot supply boat November 1998 8.8 -- 1 205-foot supply boat November 1998 8.7 4.7 1 205-foot supply boat December 1998 8.8 6.4 1 205-foot supply boat February 1999 8.8 6.4 1 152-foot crew boat March 1999 2.5 2.5 1 152-foot crew boat May 1999 2.7 2.1 1 152-foot crew boat July 1999 2.7 2.1 1 SDM(TM) June 1999 5.4 4.9 1 SDM(TM) November 1999 5.4 4.9 1 SDM(TM) April 2000 5.4 -- 1 279-foot construction/anchor handling tug/ supply vessel May 1999 21.7 11.8 1 45,300 dead weight ton double-hull product carrier December 1998 25.9 (1) -- 1 45,300 dead weight ton double-hull product carrier January 1999 25.9 (1) -- 1 45,300 dead weight ton double-hull product carrier June 1999 25.9 (1) -- TOTAL $ 184.6 $ 45.7 (1)Represents the Company's 50.8% interest in partnerships. The Company expects to reduce its interest to less than 50%; see note 8 to the condensed consolidated financial statements. Also form the latest 10 Q The Company's future capital needs are expected to relate primarily to debt service obligations, maintenance and improvements of its fleet. The Company's principal and interest payment obligations for the remainder of 1998 are estimated to be approximately $38.0 million, and operating lease obligations for the remainder of 1998 are estimated to be approximately $2.0 million. Capital requirements for vessel maintenance and improvements, including scheduled drydockings, are expected to be approximately $11.0 million for the remainder of 1998. Bottom line is they are adding capacity from earlier made decision's during a period when dayrates and utilization of the existing fleet is dropping like a stone. It actually held up pretty well in the 1st and 2nd quarter and fell off the clif in the 3rd. they have a continued need for capital expenditures as indicated in the 3rd qtr Q (11 mil) and their debit service is eating all their operating income. If the trend DOESNT reverse they will be in deep dodo. Greg respectively I would suggest that budgets are set for E&P for this year by the major oils and probably not likely to change. Unless oil continues its upward climb you can expect continued dissapointing news out of HMAR for the balance of the year. Might be a takeover canidate before they get a chance to turn it around (interesting angle should they continue to deteriorate) Mad2

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