Marco Polo Marine - Potential Bankruptcy?

Yesterday, MP Marine issued a statement that it had unilaterally terminated a contract for a high spec rig (scheduled to be delivered in Q4 F15) from PPL shipyard due to material breaches on the delivery of the contract. Specifically, cracks were found to be all three legs of the rigs after two rounds of testing.It s also going to claim back the initial 10% deposit of the contract through the legal process.

This morning, Sembcorp Marine, the parent of PPL shipyard issued a statement that PPL did not yet received the termination order and will considered MP Marine unilateral announcement as a breach of the contract and will take the necessary actions to reclaim it rights.

The way I see it is that this is NOT AN OVERNIGHT decision that surprised both sides. MP Marine could not have just paid up 10% of the contract and expect delivery by Q4 FY15. It must have missed at least one or more subsequent payments.With a market cap of just $70m and in such a difficult O&G environment with oil prices hovering around $US40, there is no way it could have proceed forward to take delivery of the rig when it is a newbie in the rig leasing business with zero customer.

Now the matter has gone to legal, it will be reasonable to expect a tussle but the chances of MP Marine getting reimbursed back for the initial 10% deposit is low at this late stage in the project.In the worse case, bankruptcy is not a impossible scenario. the CEO Sean Lee may have been too preoccupied with his new bride Vivian Hsu to keep his eyes on the crystal ball.This is evidenced by the more than 10% drop in MP Marine share price today.

My two cents worth!

LMIRT 3QFY2015

Revenue                                 = $43,547,000
NPI                                         = $40,290,000
Distributable Income             = $21,487,000
DPU                                       = 0.77 cents
NAV                                       = 37 cents
Gearing                                   = 35%

SAT 2QFY15/16

Revenue                                  $422.7m
Operating Profit                      $59.2m
Share Of Associates                $11.9m
PATMI                                    $59.7m
EPS                                          5.4 cents
NAV                                        $1.31
Debt/Equity Ratio                    0.07

CDL Trust 3QFY2015

NPI                                               $33,080,000
Income Available For Dist           $25,880,000
DPU                                              2.36 cents
Occupany                                      90.2%
ARR                                              $201
RevPAR                                        $181
Debt                                               $930m
Gearing                                          36.5%
Interest Cover                                 6.6X
Avg Weighted Cost Of Debt          2.6%
NAV                                               $1.586

StarHillGlobal Reit 1QFY2015/2016

Revenue                                   $56.8m
NPI                                           $43.6m
Income Available For Dist       $30.0m
DPU                                          1.31 cents
Total Debt                                 $1,127m
Gearing                                     35.7%
Interest Cover                           4.8X
Average Interest Rate               3.13%
Unencumbered Asset Ratio      74%
NAV                                          88 cents

AscendasIndiaTrust 2QFY2015/16

Total Property Income                          =  Rupee 1,704m
NPI                                                        =  Rupee 1,107m
Income Available For Dist                   =  $14m
DPU                                                      =  1.37 cents (1HFY2015/2016 2.74 cents)
NAV                                                      = 65 cents
Interest Cover                                         = 4.2
Gearing                                                   = 27%
Percentage Fixed Rate Debt                   = 100%
Average Cost Of Debt                            = 7%
Effective Borrowings                             = $342m (INR:75%,SGD:25%)

INR:SGD (46.7:1)

CRCT 3QFY2015

Gross Revenue                                            RMB 251,812,000
NPI                                                              RMB 160,301,000
NPI                                                              $ 35,204,000
Distributable Income                                   $ 22,254,000
DPU                                                             2.64 cents (2.35 cents for 3QFY14)
NAV (adjusted for dist)                               $ 1.68
Gearing                                                        28.5%
Interest Cover                                              6.4
Avg Cost Of Debt                                        2.98%
Unencumbered Assets                                 96.7%