A great post from a FGH subcontractor. From "go to yard" to gone ?
This post is from the Motley Fool thread from someone who posts that they are a subcontractor & works with FGH. While FGH did not go Ch 11 - the selloff indicated many saw that as the next step.
Their ass may have only been saved from bankruptcy by the last minute settlement. But when you read this; it does not quite paint a picture of the "go to yard" now does it ?
What no one seems to understand; is FGH went from a small company with moderate revenue to the $40 high flyer on just a small number of very HUGE OFFSHORE RIG construction contracts. When these very few - but, Very huge $ contracts and backlog dried up; should it really surprise anyone that this went from $45 to $5 in retrospect after reading this ?
boards.fool.com
This guy has some really interesting perspectives...
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<<Date: 1/14/00 7:53 PM
Author: yn4481la Number: of 5856
Recommendations: 2
Greetings, friends and fellow Fools...
Sorry for the long absence. Doubly sorry because I can't guarantee I'll be doing much more than reading for a while, although I'll let y'all know anything I think you need to know.
Just finished reading the last 50 or so posts and saw someone speculate if I had taken a new job. Well...not exactly. I'm still drawing a paycheck from ABB Deepwater Services but I feel like a full-time FLC employee. We recently signed a General Engineering Services Agreement with them that has the effect of making us their default outside engineering source. Rather than bidding, negotiating, and signing a contract for each individual job, we have a standing agreement re services and billing rates. When they need something they just send it over and say, "Do it." I manage the design effort and one of our Asian geniuses heads up the analysis. The upshot is that rather than going to Threadneedle Street and eating their doughnuts, I'm now expected to take my turn at furnishing the doughnuts. So far the expense account gnomes haven't balked.
Yes, FLC's activity is picking up. The RBS-8M, now christened the Deepwater Nautilus, will depart Korea toward the end of this month enroute to Galveston. Scheduled to arrive in early March (estimated 40-day transit). For those of you within traveling distance of Galveston, FLC is going to have an openhouse on the rig before she heads into the GoM. If any of you want to go let me know and I'll make sure you get invites.
The RBS-8D is on schedule, with christening expected next Nov or Dec.
We're currently doing an analysis of the hoisting system on the drillships. After dropping two BOP stacks, one off each of the first two ships to go into service, they believe there's a fundamental flaw in the Daewoo design. We're going to find out and, if necessary, redesign it. FLC wants the problem fixed because they have a full schedule for all four ships and they can't afford these shutdowns for repairs on a new ship.
>>>re: FGH <<<
***The hot news of the day is, I believe, the impending threat that the newly-organized Friede Goldman Halter will seek Chapter 11 protection. A couple of you commented on it. We've been in daily contact with our sources on the MS coast (FGH owes us money) and here's what I know.
The evolution of FGH will probably someday be a B-school study in how not to do it. Going back a few years...Texas Drydocks, Inc. (TX) and Ham Industries (MS) were very successful fab yards specializing in the overhaul and upgrade of drilling rigs. Both companies were bought out--TDI by Halter Marine Group, Ham by Friede Goldman International.
What always seems to happen then, students? Right. Both HLX and FGI told their new divisions to stop doing overhauls and upgrades, the jobs that had made them both respected and profitable. Start doing new-build rigs, which neither company knew how to bid or manage.
The result was predictable. Both TDI-Halter and Friede Goldman Offshore (their fancy new names) lost money...and lost more money...and lost yet more money.
When FGI and HLX merged they both brought major losers to the table. FGI brought the Bingo 9000 rigs. These rigs had been contracted by Ocean Rig, a Netherlands company. Ocean Rig contracted them in 1997 without a signed lease. Ouch! The market collapsed in 1998 and Ocean Rig has been scrambling for money ever since.
HLX brought the two Amethyst rigs, each a $95 MM rig that HLX had promised to build for $87 MM. Structural and pipe design by a Canadian company that filed for the Canadian equivalent of Chapter 11 protection before the ink was dry on the contract. Electrical and instrumentation design by a French company that was hovering on the verge of bankruptcy. The only subcontractor that performed on schedule and per specifications was us. We designed the mud systems and the high-pressure piping.
Both HLX and FGI have their own internal problems--inexperienced project management, no cost controls, no one who understands critical-path planning.
All four companies--HLX, FGI, Petrodrill, and Ocean Rig--have limped along for the past year, stealing from Peter to pay Paul, leaving subcontractors (including us) holding the bag for the standard 10% holdback, playing a pre-recorded "the check is in the mail" on their answering machines.
But you can only play that game for so long, and their time has run out. My personal belief is that FGH will file for Chapter 11 protection within 24 hours of the arbitration hearing scheduled for late this month.
As for the resignation of John Dane, it's too little, too late.
And that's about all I know about your lawnmower.***
LA>>
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Well Sarge; 800 lb Gorilla - or a Dinosaur about to become extinct ? ... I guess the Street will decide.
In all fairness; you have not gotten ANY part of the FGH story right so far...
I'll tell you something else; you've painted Holloway as some sort of Jack Welch of the Oil Business; well I'll tell you what; the limited contacts & information that I have; paint a TOTALLY opposite picture.
The way that options deal was structured should have told you something.
The way Dane disappeared should tell you something.
When there were over 1, or even 2 million shorts way, way back before ANYONE from ANY hedge fund, or individual short trader should have had a clue about shorting this stock - it was heavilly shorted; that did tell some of us something...
That they buy a damn shipbuilder and do the road show talking about the benefits of diversification into shipbuilding and then mere months later are telling Merrill they are dumping the boat business ? Do they even know what damn business they are in, or want to be in - day to day ?
In my opinion, I have not seen a single CEO who has perhaps looked out for his OWN vested interests more singularly and totally ignored public shareholder value more than Holloway.
In my opinion, I have not seen ANY CEO more totally F-UP than what Holloway did in this total screw up of the HLX merger & Dane's ouster in mere months after being crowned the CEO successor in 2 years.
In my opinion, I have never seen a group of public shareholders more left in the dark and out in the cold and more totally cluesless about the core business than what FGH's are and have been.
Sarge, you have digressed to someone who obviously to all; has all of his eggs in one very unstable and quite under water basket... You have taken on an embarrasing aire of desperation that is not a pretty sight.
You have lost all credibility in your total lack of knowledge of the facts and the reasons FGH is where it is today. You knew nothing of the companies comments & conversation with Merrill, or the public info on dumping the shipbuilding business. You have spoken to IR and then turn around and posted that great news was coming & everything was great; only to have FGH drop a damn bomb the next damn day and have the stock blow up !
Why in the hell would ANYONE care about, or trust ANYTHING that you relay from the FGH IR guy any more - after this last fiasco ?!?!?
You literally walked blindly led by FGH's IR guy into a buzz saw ?
FGH may have been saved from Bankruptcy by the settlement with Ocean Drill, but what happens after these rigs are built ?
There is a good post on Yahoo talking about FLC. FLC has something like 1/2 of their OFFSHORE RIG fleet still either ready stacked, or cold stacked . Literally, they by themselves have more Rigs stacked than I think FGH may have built in the last few years ? - approx 33 rigs ?
Folks; there is so much baggage, so many issues, so much lost confidence in management; why bother ?
The only thing FGH has done here; is gotten a stay of execution perhaps; merely perhaps only postponing what is still the enevitable ?
Too much expansion, too much overhead, to much capacity taken on at the top and at the end of a historic peak in what has allways been a subsector niche that goes "Boom to Bust".
So how sharp was Holloway really; to have taken on all this size at the "Top" ?
I think the shareprice at $5 instead of $45 and those two Million shorts answer that question. As it may become apparent that FGH was precariously close to Bankruptcy; just how damn savy was he after all ?
I agree with another Yahoo post that sums it all up pretty good. Do you think you will get your money back quicker by continuing to hold FGH here, or by having sold a couple of months ago at $10,or $11 and gotten the tax loss deduction and then buying another Oilpatch stock without all the problems & questions ? And is selling on any pop here and then buying another Oilpatch stock just as $30 Crude may help the OSX breakout to a great run - just when FGH is going to have to post all those charges and perhaps a loss for the qtr; really the smart thing to do ?
Time to cut your losses and get on with BOOM 2000 ?
The BOOM 2000 Train will be leaving the station very shortly; does FGH look more like an engine, or a caboose on the Boom 2000 Train ?
... Sarge, that's a rhetorical question by the way ~ |
