No matter how Armada restructures, whether it becomes longer term is limited to the firm period, ie. 7 years. With a RM21 billion order book, and an EBITDA margin of 40%, it means that there will be RM8.4 billion in cash generated from RM21 billion to pay RM12 billion of debts. This excludes payment for interests and taxes.

Revenue is insufficient to pay debts. Period.

Time for banks to write off debts and convert to Armada shares? After all, AK and gang owns 40%, EPF/KWAP/AMANAH owns another 20%.

Will PN17 be used to force banks to become shareholders before going private?

.
**********ANNOUNCEMENT*********

Armada fails to restructure debts with its FINANCIERS.


**********ANNOUNCEMENT*********

We shall explain soon why the impairments made thus far and more to follow later will never be written back. That is to say, all of Armada's assets are worth scrap.

Stay tuned.

Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER BUT ITS FIRM IS ONLY UP TO 8 YEARS!
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING

Armada’s ability to secure new contracts is likely to be 0%

PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU and INDONESIA.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder.
PROOF – Armada’s behavior as a contractor has been one of litigation.
PROOF - You cannot bid for contracts if you do not have donor tankers.
PROOF – Armada’s recent FPSO is a lemon.

Unfortunately, management didn’t realise these issues until we highlighted them more than a year ago. An incompetent management indeed!

So it’s the crunch time now. What are the options available to the shareholders?

1. Take Armada private
2. Sell Armada
3. Dispose assets to continue to try to survive

1. Taking Armada private

Taking Armada private is the option being pursued now. It is going to be taken private by the main shareholder along with EPF, Amanah Raya and etc at a very low price, by which time the announcement is made, it is going to be the 5 day average price. There is no law that says EPF and Amanah Raya cannot invest in private companies. Plus, the monies to be forked out is way less than it would be if the main shareholders were to fork out for a rights issue.

But unlike its other sister company, it is going to be taken private not to realise its true value in future as Armada is never going to recover until 2025 when the O&G market picks up, by which time Armada’s contracts are all but over. It is being taken private to avoid being too “public” as in the case of Carlos Ghosn.

2. Sell Armada

No one is buying Armada in this market until 2025. And the new shareholders have to deal with an incompetent management.

3. Dispose assets to continue to survive

Assets are worth nothing as long as the market doesn’t recover until 2025. The asset are still being value too high. Disposing assets wouldn’t be enough to settle Armada’s debts anyway.

So, taking Armada private at a low price say 10sen is the action by its shareholder’s now. When private, it would avoid the Carlos Ghosn issue on itself, but it is still an endless money pit.

The point of no return is here.

We shall examine what are the next steps for Armada's shareholder since all is lost for its O&G venture.

We shall highlight the options available on their table and explain why in every scenario every other shareholder would have their investments in Armada be realised with a 95% loss if they were investors from day 1.

Stay tuned.

A quick refresher of Armada’s ability to secure new contracts.

PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder
PROOF – Armada’s behavior as a contractor has been one of litigation.
PROOF - You cannot bid for contracts if you do not have donor tankers.
PROOF – Armada’s recent FPSO is a lemon.

This brings us to the latest talk of Karoon. The same modus operandi of leader of the pack, preferred contractor talk?

Maybe if you knew,

The customer of Karoon is bankrupt and can't pay (in a worst position than Erin).
The field is in a country that is also bankrupt itself.
The FPSO Claire is not a plug and play. The whole FPSO will have to be torn down and rebuilt from scratch.
The project will not even kick off for many years to come, at least 8 years due to being not feasible.

So, what is the next contract award?

A quick review of Armada’s ability to secure new contracts.


PROOF - You cannot bid for contracts if you do not have donor tankers.

Armada had released press statements that is has sold some of its donor tankers and have denied having options on particular tankers as reported by the media. So, what are they bidding with?


PROOF – Armada’s recent FPSO is a lemon.

Armada’s latest FPSO is a lemon as it was impaired by RM500million or more than 1/3 of the FPSO value. This impairment is significant because it means that Armada would not be able to reap the intended economic benefits from the FPSO. There was also no further mention on any revision to the duration of the Kraken contract as a result of the lower production levels of the FPSO.

And with the other reasons which were highlighted previously: -

PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder
PROOF – Armada’s behavior as a contractor has been one of litigation.

Armada will never secure new contract awards for the next 10 years.

Next week, we shall review whether Armada future contract awards are coming or not and the reasons why there will be no more new FPSO contracts for Armada for the next 10 years.

Yes, 10 years. Stay tuned.

BUT A LITTLE SUMMARY BELOW TO REFRESH YOUR MEMORIES.

Maybe 20 sen as its fair value was over-optimistic by 100%?



Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING


Additionally, Armada’s ability to obtain new contract awards in the future is considered difficult. The reasons are:


PROOF - Lack of FDIs for the foreseeable future, at least until 2030.
PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder
PROOF – Armada’s behavior as a contractor has been one of litigation.

Armada Kraken is a "lemon" FPSO which they can never ever make good. It will forever breakdown, even it is pushed to full capacity. The impairment of Kraken was a negotiated impairment, which means that the full impairment has not been made. There goes the IRR and there goes Armada's reputation, whatever is left of it.

The announcement on Final Acceptance is not worth 10 sens with what it is. It was a PR stunt.

Armada has not revised its Orderbook to highlight the even greater deficiencies to meet its debts.

Nevertheless. RM2.20 to RM0.455 over the last couple of years speak volumes.

*** Be weary of those who keep insinuating that Armada is a share that you can profit from for whatever reasons. ***

The fair share price of Armada as it is now is 20 sens for what we know.

There have been various corporate exercises for Armada since listing in July 2011. If you were the initial shareholder since listing and excercised your rights under the various corporate exercises, Armada’s share price at your initial point of investment is RM2.20 per share thereabouts now.

As of the latest closing price, it is RM0.455, representing a loss of RM1.745 per share or nearly 79.4% or 80%!!

The main shareholder will not subscribe anymore in Armada. They have troubles of their own.

So many promoters have been insinuating the +ve's of Armada from RM2.20 up to now of RM0.455 telling of upsides, rebounds, profits rising, restructuring, etc. and what not to convince investors to part with their hard earned money.

We have been highlighting the issues with Armada, the loss of Zaba Zaba, and the pressure upon EPF to prop up Armada share price for more than 1 year ago. All turned out correct.

With Kraken not going to be Final Accepted, hence, Armada's planned restructuring and roadshow would not go ahead. You cannot roadshow with a "LEMON" FPSO at hand.

The rights issue was a "red herring".

Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING


Additionally, Armada’s ability to obtain new contract awards in the future is considered difficult. The reasons are:

PROOF - Lack of FDIs for the foreseeable future, at least until 2030.
PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder
PROOF – Armada’s behavior as a contractor has been one of litigation.

Right issue? Do you think the main shareholder want to invest more in Armada?

Armada not serious in solving Kraken FPSO FINAL ACCEPTANCE! There are more pressing things at hand than doing a marathon!!!!

https://www.linkedin.com/company/bumi-armada?trk=recent-update_content#updates

Great work Team Kraken – thank you for all your effort and hard work put in to get to the top 10 teams in the highly competitive Rigrun 2018 summer competition. We are proud of you!

Armada’s ability to obtain new contract awards in the future is considered difficult. The reasons are:


PROOF 1 - Lack of FDIs for the foreseeable future, at least until 2030.

FDIs do not increase in accordance with higher oil prices now for a few reasons. One, the artificial high oil price due to geopolitical concerns creates uncertainty for producers/majors/independents. Two, intervention by oil producers create price stability for consumers, but on the other hand create artificial pricing which again create uncertainty to oil producers/majors/independents. Three, existing shale producers re-enter the market without any barriers to artificially high oil price, thereby exasperating oil supply direction. Forth, FDIs needs years of planning and review and do not just re-engage within a year to due artificial oil price.


PROOF 2 - Armada has lost the momentum as a major player since 2014.

Armada lost to Yinson in ENI Ghana's Cape Tree Points FPSO project in 2015.
https://www.rigzone.com/news/oil_gas/a/136956/yinson_clinches_254b_fpso_contract_from_eni_for_ghanas_octp_block/?all=hg2

Armada lost to Yinson in Talisman's Vietnam Ca Rong Do FPSO project in 2017.
https://www.thestar.com.my/business/business-news/2017/04/26/yinson-nets-fpso-charter-contract-valued-up-to-rm4pt35bil/


Zaba Zaba Project Scrapped.
https://oraclenews.ng/italian-court-ruling-stalls-12-bn-zabazaba-field-development/


In these 3 cases, Armada was called front-runner, preferred contractor, in the finals, etc.


PROOF 3 - Armada has been without a business development / sales team since 2014.

Clientele engagement and bidding work begins years, typically 6 years, before actual contract award. Since 2014, Armada has not been engaging actively with its clients. It has only been recently that Armada has been looking to have a business development / sales team again.

https://www.linkedin.com/jobs/view/569573217/


PROOF 4 – Armada embroiled in various allegations from various countries including EU.
There are many allegations, from Africa, from EU to South America that are publicised in blogs or news articles. A few of the prominent ones are:

https://www.timesofmalta.com/articles/view/20180305/opinion/Silencing-adversaries-Denis-Tanti.672389

http://www.independent.com.mt/articles/2018-04-16/local-news/David-Casa-says-he-will-not-reveal-source-in-order-to-protect-the-person-s-life-6736188182

https://www.nytimes.com/2018/04/17/world/europe/journalist-murder-malta-eu.html

Such allegations even not proven yet in a court of law, is very detrimental to bidding of work.


PROOF 5 – Armada’s strategic direction is uncertain due to controversies with its major shareholder

http://www.business-standard.com/article/companies/malaysian-mogul-t-ananda-krishnan-to-lose-7-bn-due-to-failed-aircel-foray-118030100254_1.html

http://www.sundaytimes.lk/article/1036448/slt-ceo-dileepa-wijesundera-quits

https://www.bloomberg.com/news/articles/2016-09-24/india-issues-arrest-warrant-for-malaysian-billionaire-krishnan

Is Armada being led correctly to the correct path?


PROOF 6 – Armada’s behavior as a contractor has been one of litigation.

http://www.theedgemarkets.com/article/bumi-armada-gets-notice-erin-petroleum-seeking-shutdown-its-fpso-operations

https://www.offshoreenergytoday.com/woodside-ends-fpso-contract-bumi-armada-takes-legal-action/

Relations with its existing clientele are not very good and Armada has been taking the litigation route in many of its dealings.


These are the 6 factors that are do not go well with Armada’s attempts to bid for work in the future.

Revenues from Armada IS NOT ENOUGH to cover its debt. (all numbers are in RM'000).



PROOF - REVENUES NOT ENOUGH TO SETTLE DEBT

Page 8 of Q1 2018 Report – EBITDA
NET CASH FLOWS GENERATED FROM OPERATING ACTIVITIES - RM214,478

Page 2 Q1 2018 Revenue for the quarter
Revenue – RM600,342

So, EBITDA margin is 35.7% (214,478 / 600,342).

Page 5 of Q1 2018 Report - Total debts match to FIRM orderbook
Current Liabilities Borrowings – others – RM3,510,364
Current Liabilities Borrowings – Armada Kraken Pte Ltd – RM1,955,083
Non Current Assets - Borrowings – RM5,402,936
Total debts (add all above) – RM10,868,383

Page 1 of media release for Q1 2018 - Total FIRM Orderbook
FIRM Orderbook – RM26.2 billion

So, EBITDA from Firm Orderbook RM26.2 billion x 35.7% = RM9,353,400,000.

So, RM9.4 billion in EBITDA from FIRM Orderbook is insufficient to pay RM10.9 billion of debts.



PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER

EBITDA per quarter - RM214,478 ('000)
Total debts RM10,868,383 ('000)

So, it would take about 50.67 quarters to settle or NEARLY 13 years. (10,868,383 / 214,478 = 50.67 quarters or NEARLY 13 YEARS !!



PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES

AND this is not including payments for Taxes and INTERESTS / Finance Costs !!

Let’s not talk about reduction in rates, delays in production targets, bad debts etc which puts Armada in a worst off position.

Even if EBITDA margins increase to 50%, Armada may be able to pay its debts, but still insufficient to cover Taxes and INTERESTS / Finance Costs !! Even throwing in the RM1.5 billion cash would be insufficient to cover.



PROOF – ARMADA CANNOT GET ANY MORE FINANCING

Page 20 Q1 2018 Report - Borrowings
Note 21 point (2) – not met the financial covenant of net debt over earnings before interest, taxation, depreciation and amortisation (“EBITDA”)


All the analyses are long term and not Q by Q as they are myopic, lack focus and lack big picture moves.

Btw, Armada cannot comply with the debt covenant ratio and that is consistent with the Firm orderbook EBITDA to total debt review we just did.

Do you know what that means? Its stated in note 21.

Check with bankers first what that means before you say "entertaining" as you just shot youself in the foot.


Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING

If this was presented in a pie chart, it would look like this: -

XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX

Pie Chart of Total CASH FIRM ORDERBOOK

XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX

Pie Chart of TOTAL CASH OPEX AND CASH DEBT THROUGHOUT FIRM ORDERBOOK

Before proceeding to review the ability of Armada to obtain new contract awards in the future, it is worth noting that whilst the OPTION period of the contract is very sizeable, it is fraught with the following risks, (some of which is happening now). Those risks are: -

Option periods are subject to a year on year renewal.
Option periods are subject to discounts / reductions.
Option periods are subject to termination.
Option periods if granted, would be used to settle long outstanding debts, as with the case of TGT.

It is because of these risks, the expected upsides in option periods are quite restricted.

The impairment of Kraken is about RM500million. What does it mean? Was the PwC correct in doing so? Why did PwC do it even if Enquest was paid the fine?

RM500million is 1/3 the value of Kraken FPSO. Does it mean that the FPSO can forever produce 2/3 of its intended capacity? Is it going to be 2/3 of 80,000 barrels or 53,000 barrels throughout the duration of its contract?

Will there be more impairments?

What does it mean for Armada's reputation for winning new contracts?

https://oraclenews.ng/italian-court-ruling-stalls-12-bn-zabazaba-field-development/

Final investment decision from two European multinational oil companies, Shell and Eni, on the development of Nigeria’s ultradeep offshore oilfield may have been pushed back by early outcomes from Italian courts over allegations of shady deals in acquisition of the oil block

A court in Milan, Italy, weekend jailed Messrs Emeka Obi, Nigerian, and Gianluca Di Nardo, Italian, for four years each in consequence of their respective roles in assisting Malabu Oil and Gas auction awarded prospecting acreage lease area hosted in oil prospecting licence (OPL) 245 in the deepwater offshore Niger Delta.

Thus, the highly anticipated $12 billion development project on OPL 245 and tapping of production from Nigeria’s biggest oil reserves may have fallen of the table.

Industry information about Armada is being withheld by i3. Post are being censored.

Final acceptance has never been an issue with Armada. It never was and it never will.

Armada has other pressing issues at hand.

Additionally, the HSBC report just really shows how even analysts themselves do not know about the business and interpret their financial situation. Example, since when has Armada had 9 operating FPSOs?

Please also forward it to MSWG.

Please go ahead and forward to SC. That is what we want.

Oh dont't you know, Petrofac and Enquest have been in discussions for taking over as operator.

Did they tell you that TGT1 extension is with 30% discount on the existing dayrate?

Why are they delaying the announcement of Kraken acceptance?

Maybe Enquest is going to terminate Armada as Fpso operator and buy over Armada Kraken at cost? Armada will use the proceeds to settle Kraken debts only?

Hmmmmm :)

Since it out worldwide and now everybody knows what Armada is!

http://royaldutchshellplc.com/2018/06/08/more-opl-245-corruption-continues-into-2018/

The major shareholder, the BOD and the Management had to undertake these options just to remain in business.

First Mexico, then Malta and the EU, then Vietnam and now Nigeria/Africa.

Apparently most of the investors here have a conflict of interest in Armada by way of having its shares. And apparently, they are also unable to explain balance sheet changes even with the cash flow statement being disclosed.

Such is the level of financial prowlness of these investors.

We categorically state that we have no interest in Armada and hence no conflict of interest. We also categorilly state the have the RAKYAT interest at heart.

MORE TO COME.

Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING


Additionally, Armada’s ability to obtain new contract awards in the future is considered difficult. The reasons are:


PROOF - Lack of FDIs for the foreseeable future, at least until 2030.
PROOF - Armada has lost the momentum as a major player since 2014.
PROOF - Armada has been without a business development / sales team since 2014.
PROOF – Armada embroiled in various allegations from various countries including EU.
PROOF – Armada’s strategic direction is uncertain due to controversies with its major shareholder
PROOF – Armada’s behavior as a contractor has been one of litigation.


Now that we have established significant headwinds for Armada, we are now going to analyse what options there are for Armada from the point of view of the Main Shareholder.


There have been various corporate exercises for Armada since listing in July 2011. If you were the initial shareholder since listing and excercised your rights under the various corporate exercises, Armada’s share price at your initial point of investment is RM2.20 per share thereabouts now.


As of the latest closing price, it is RM0.72, representing a loss of RM1.48 per share or nearly 67% or 2/3.

!!!!! THAT IS A LOT OF MONEY LOST BY THE MAIN SHAREHOLDER !!!!!

If there weren’t any EPF support, Armada’s share price would have even been lower.

HOW IS THE MAIN SHAREHOLDER GOING TO RE-COUP ITS LOSSES?

Armada’s ability to obtain new contract awards in the future is considered difficult. The reasons are:


PROOF 1 - Lack of FDIs for the foreseeable future, at least until 2030.

FDIs do not increase in accordance with higher oil prices now for a few reasons. One, the artificial high oil price due to geopolitical concerns creates uncertainty for producers/majors/independents. Two, intervention by oil producers create price stability for consumers, but on the other hand create artificial pricing which again create uncertainty to oil producers/majors/independents. Three, existing shale producers re-enter the market without any barriers to artificially high oil price, thereby exasperating oil supply direction. Forth, FDIs needs years of planning and review and do not just re-engage within a year to due artificial oil price.


PROOF 2 - Armada has lost the momentum as a major player since 2014.

Armada lost to Yinson in ENI Ghana's Cape Tree Points FPSO project in 2015.
https://www.rigzone.com/news/oil_gas/a/136956/yinson_clinches_254b_fpso_contract_from_eni_for_ghanas_octp_block/?all=hg2

Armada lost to Yinson in Talisman's Vietnam Ca Rong Do FPSO project in 2017.
https://www.thestar.com.my/business/business-news/2017/04/26/yinson-nets-fpso-charter-contract-valued-up-to-rm4pt35bil/

In both cases, Armada was called front-runner, preferred contractor, in the finals, etc.


PROOF 3 - Armada has been without a business development / sales team since 2014.

Clientele engagement and bidding work begins years, typically 6 years, before actual contract award. Since 2014, Armada has not been engaging actively with its clients. It has only been recently that Armada has been looking to have a business development / sales team again.

https://www.linkedin.com/jobs/view/569573217/


PROOF 4 – Armada embroiled in various allegations from various countries including EU.
There are many allegations, from Africa, from EU to South America that are publicised in blogs or news articles. A few of the prominent ones are:

https://www.timesofmalta.com/articles/view/20180305/opinion/Silencing-adversaries-Denis-Tanti.672389

http://www.independent.com.mt/articles/2018-04-16/local-news/David-Casa-says-he-will-not-reveal-source-in-order-to-protect-the-person-s-life-6736188182

https://www.nytimes.com/2018/04/17/world/europe/journalist-murder-malta-eu.html

Such allegations even not proven yet in a court of law, is very detrimental to bidding of work.


PROOF 5 – Armada’s strategic direction is uncertain due to controversies with its major shareholder

http://www.business-standard.com/article/companies/malaysian-mogul-t-ananda-krishnan-to-lose-7-bn-due-to-failed-aircel-foray-118030100254_1.html

http://www.sundaytimes.lk/article/1036448/slt-ceo-dileepa-wijesundera-quits

https://www.bloomberg.com/news/articles/2016-09-24/india-issues-arrest-warrant-for-malaysian-billionaire-krishnan

Is Armada being led correctly to the correct path?


PROOF 6 – Armada’s behavior as a contractor has been one of litigation.

http://www.theedgemarkets.com/article/bumi-armada-gets-notice-erin-petroleum-seeking-shutdown-its-fpso-operations

https://www.offshoreenergytoday.com/woodside-ends-fpso-contract-bumi-armada-takes-legal-action/

Relations with its existing clientele are not very good and Armada has been taking the litigation route in many of its dealings.


These are the 6 factors that are do not go well with Armada’s attempts to bid for work in the future.

Based on the financial review of Armada, it was determined that: -

PROOF – ARMADA REVENUES ARE NOT ENOUGH TO SETTLE DEBT
PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER
PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES
PROOF – ARMADA CANNOT GET ANY MORE FINANCING

If this was presented in a pie chart, it would look like this: -

XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX

Pie Chart of Total CASH FIRM ORDERBOOK

XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX

Pie Chart of TOTAL CASH OPEX AND CASH DEBT THROUGHOUT FIRM ORDERBOOK

Before proceeding to review the ability of Armada to obtain new contract awards in the future, it is worth noting that whilst the OPTION period of the contract is very sizeable, it is fraught with the following risks, (some of which is happening now). Those risks are: -

Option periods are subject to a year on year renewal.
Option periods are subject to discounts / reductions.
Option periods are subject to termination.
Option periods if granted, would be used to settle long outstanding debts, as with the case of TGT.

It is because of these risks, the expected upsides in option periods are quite restricted.

Apparently, in a forum like i3, financial knowledge is somewhat lacking. Many still do not realize what the implications are here. Some were trying to rationalize with talk of some “models”, but present them in a non-relevant or incoherent explanation. Financial competency here is dismal.


Since when were we talking of profits? The only reference we made to profits was where we quoted “Do you think profits are real?”


All along we have been taking about the EBITDA and its related margin, the Orderbook and the Debts.


IN OTHER WORDS, WE WERE TALKING CASH.


We were talking TOTAL CASH REVENUE – TOTAL CASH OPERATIONAL COSTS – TOTAL CASH DEBTS to some figure, which we have shown to be negative.


We have been talking about CASH from its Revenue (Orderbook which is just a simple Daily Charter Rate / Time Charter X days), its EBITDA (Net cash flow from operations – which was Net profit less non cash adjustments and adjustments to current assets and current liabilities).


YOU CAN THINK OF THIS AS A REVIEW OF CASH FLOW minus the discount rate (if we were to include the discount rate, Armada would be in even more bad shape!).


A company could have a negative cash balance and still show a quarter to quarter or annual to annual profit. The reason for this is due to timing differences, things like Percentage of Completion (which was referred to construction accounting, Accruals, Reversals, etc.

Accounting profit has never been a good measure, rather, the economic profit approach is far more encompassing and not subject to the whims of manipulation.

Hope this helps.

The Investor Relations team is working very hard callng the analyst, begging to get a good report card for Armada.

Here is an insider tip for you from us.

"It is no wonder that the shareholders of Armada and its Board call the firehawk types "pathetic" when the level of financial understanding is so low. They are just pawns."

Apparently firehawk and his bankers still do not understand. If your bankers are investment analysts, customer service officers, remisiers, IB or of similar type, you should seek help.

Those that run companies; those CFOs; those who go make deals happen; those that grow businesses are those that you should seek, not those that sit on chairs all day looking at excel sheets and calling up people all day to ask for insider tip.

You still shot yourself in the foot.

All the analyses are long term and not Q by Q as they are myopic, lack focus and lack big picture moves.

Btw, Armada cannot comply with the debt covenant ratio and that is consistent with the Firm orderbook EBITDA to total debt review we just did.

Do you know what that means? Its stated in note 21.

Check with bankers first what that means before you say "entertaining" as you just shot youself in the foot.

With the new Government, financial re-structuring based on the "iMDB" model where a company is broken into different parts (i.e. separation of liabilities to one company(s) and assets to other company(s)) to increase perceive value is highly debatable at this point.

Financially, it is sound and comply with existing financial and international laws. Socially, it is deemed corruption. Looks like Armada cannot take this route "anymore".

:)
:)

Definately so as when you add up the % shareholdings of Ananda Khrisnan, his partners - Karisma and Wijaya, EPF, Amanahraya,Tabung Haji, KWAP, is appox. 60%. With losses (since listing and ex-rights price of RM2.10 to Rm0.77), they will have to keep the ball rolling.

How much of taxpayers money is used to keep it's price from sliding further?

Do note however, Tan Sri Wahid Omar, ex-CEO of Maybank who help list Armada wants nothing to do with Armada anymore and sold it off to Amanahraya when he took over the helm of PNB.

He knows better.

As predicted, revenues from Armada IS NOT ENOUGH to cover its debt. (all numbers are in RM'000).



PROOF - REVENUES NOT ENOUGH TO SETTLE DEBT

Page 8 of Q1 2018 Report – EBITDA
NET CASH FLOWS GENERATED FROM OPERATING ACTIVITIES - RM214,478

Page 2 Q1 2018 Revenue for the quarter
Revenue – RM600,342

So, EBITDA margin is 35.7% (214,478 / 600,342).

Page 5 of Q1 2018 Report - Total debts match to FIRM orderbook
Current Liabilities Borrowings – others – RM3,510,364
Current Liabilities Borrowings – Armada Kraken Pte Ltd – RM1,955,083
Non Current Assets - Borrowings – RM5,402,936
Total debts (add all above) – RM10,868,383

Page 1 of media release for Q1 2018 - Total FIRM Orderbook
FIRM Orderbook – RM26.2 billion

So, EBITDA from Firm Orderbook RM26.2 billion x 35.7% = RM9,353,400,000.

So, RM9.4 billion in EBITDA from FIRM Orderbook is insufficient to pay RM10.9 billion of debts.



PROOF - 13 YEARS TO FULLY SETTLE DEBT IF REVENUE STABLE FOREVER

EBITDA per quarter - RM214,478 ('000)
Total debts RM10,868,383 ('000)

So, it would take about 50.67 quarters to settle or NEARLY 13 years. (10,868,383 / 214,478 = 50.67 quarters or NEARLY 13 YEARS !!



PROOF - NOT ENOUGH TO SETTLE INTEREST AND TAXES

AND this is not including payments for Taxes and INTERESTS / Finance Costs !!

Let’s not talk about reduction in rates, delays in production targets, bad debts etc which puts Armada in a worst off position.

Even if EBITDA margins increase to 50%, Armada may be able to pay its debts, but still insufficient to cover Taxes and INTERESTS / Finance Costs !! Even throwing in the RM1.5 billion cash would be insufficient to cover.



PROOF – ARMADA CANNOT GET ANY MORE FINANCING

Page 20 Q1 2018 Report - Borrowings
Note 21 point (2) – not met the financial covenant of net debt over earnings before interest, taxation, depreciation and amortisation (“EBITDA”)

Why is EPF accumulating?

Armada cannot get financing anymore with its financial situation. FIRM Ebitda cannot meet Short term and Long term debt in totality.

Armada faces uphill task of getting contract awards due to various allegations from various countries.

Armada is restricted in doing another corporate exercise. Pity those who are still stuck with Ex-rights price of rm2.10.

Armada has to make up for the huge financial needs of its main shareholder due to Aircel, Sri Lanka Telecom and India's allegation.

Hence, Armada will follow the model of "iMDB selling land at very inflated prices to MoF". Small left pocket to big right pocket senario. Rakyat and naive investors to pay for it.

Another naive investor who cannot provide accurate details of the oil price since 2014 and FPSO contract awards since 2014.

Oil price declined severely in the 2nd half of 2014.

Armada lost to Yinson in ENI Ghana's Cape Tree Points FPSO project in 2015.

https://www.rigzone.com/news/oil_gas/a/136956/yinson_clinches_254b_fpso_contract_from_eni_for_ghanas_octp_block/?all=hg2

Armada lost to Yinson in Talisman's Vietnam Ca Rong Do FPSO project in 2017.

https://www.thestar.com.my/business/business-news/2017/04/26/yinson-nets-fpso-charter-contract-valued-up-to-rm4pt35bil/

In both cases, Armada was called front-runner, preferred contractor, in the finals, etc.

Subsea contracts have been bidded at below variable costs, to the detriment of Singaporean competitors. This is something Armada will never do and will never be involved unless it has the lucrative pipe-laying work. Another irrelevant statement from naive investor.

CIMB - Caution over Bumi Armada’s possible bid for Nigeria FPSO

https://www.thestar.com.my/business/business-news/2018/04/30/caution-over-bumi-aramada-possible-bid-for-nigeria-fpso/

If it is risky for Armada, don't you think it is risky for ENI too? Do you think that ENI wants to proceed with the project?

Naive investors. Armada's projects will always achieve acceptance despite the delays. Any company in business will make sure that it will never fail. But that is not the issue with Armada.

Armada's entire FIRM (which assumes 100% acceptance) order book is RMxx billion. Armada's debt (short-term and long-term borrowings from financial institutions only) is structured against the FIRM order book of Armada. And as it stands now, the FIRM order book at its current EBITDA levels of RMxx billion is unable to cover Armada's debt. That is the issue. So questions will arise on the profit numbers.

You have to wait till Armada goes into the option period to enjoy the "free cash flow" scenario. And that is many years away. This is definitely a long term counter and price is "limited" in range for a few years!

And with various allegations from various countries, questions arise as to its ability to get contract awards. Since 2014, there has been NO CONTRACT AWARDS. Think about it why.

The truth about Zaba2 is that there is going to be no project. Even if there is, how would Armada get financing with what is said in paragraph 2 above? Additionally, if you have read CIMB's review on Zaba2's economics on Armada, it will only gain 5 sen! 5 sen from CIMB that listed Armada. They know things that it, apart from Maybank, that the other analyst don't know.

But for now, let’s wait for the Q1 report and you'll be the judge.

Just wait for the Q1 report and we will show you the real Armada.

In the meantime, as to why EPF is accumulating, there are a few reasons. Mainly to screw the investors. But we'll leave that for another day.

http://www.business-standard.com/article/companies/malaysian-mogul-t-ananda-krishnan-to-lose-7-bn-due-to-failed-aircel-foray-118030100254_1.html

http://www.sundaytimes.lk/article/1036448/slt-ceo-dileepa-wijesundera-quits

https://www.bloomberg.com/news/articles/2016-09-24/india-issues-arrest-warrant-for-malaysian-billionaire-krishnan

Money must come from somewhere to plug the gap.

So, it would seem that flywheel knows more than us here. Apart from Malta, there are also a few more "implications" from other countries. Mind sharing old news?

Are you not aware that the entire firm order book of Armada isn't enough to repay all it's entire loans? Cash is not coming to your pockets until Armada goes into the optional period. And that is subject to further rate reductions. Why are you not telling this?

Why are you also not telling everyone here that any company that is implicated, will never ever get new contract awards? Implications are a serious thing in the O&G industry. SBM was an example. Is this the reason they lost in Vietnam and Africa to unknown M'sian companies?

Are you a spokeperson for Armada?

https://www.timesofmalta.com/articles/view/20180305/opinion/Silencing-adversaries-Denis-Tanti.672389

http://www.independent.com.mt/articles/2018-04-16/local-news/David-Casa-says-he-will-not-reveal-source-in-order-to-protect-the-person-s-life-6736188182

https://www.nytimes.com/2018/04/17/world/europe/journalist-murder-malta-eu.html

Armada implicated in Malta for corruption / money laundering . Even NYT writes about it.

As per 30/9/17 report,

Orderbook (firm) - RM23 billion (assuming all FPO work no delays and reduced rates but we know there are!)

EBITDA (ie. excluding impairments, depreciation, interest an taxes) averaging 45% throughout the years - RM10.3 billion (i.e. RM23 billion X 45%)

Cash in hand - RM1.6 bil.

Total Debts (long term and short term) - RM12 billion (per various reports, tenure against firm period of contracts).

So does this mean all the revenue (cash) earned will be used to pay off the loans?

RM23bil - RM11.7 bil [hence RM10.3 bil] - RM12 bil + RM1.6 bil = -RM0.1 bil.

If so, there seems to be a cash crunch. So, what is going to be done about it? Are the profits real?

ENI and ex-CEO indicted for Saipem FCPA
https://www.linkedin.com/pulse/eni-ex-ceo-indicted-saipem-fcpa-robert-maxwell

Ghana assembly passes bill setting up anti-graft agency-officials
https://af.reuters.com/article/commoditiesNews/idAFL8N1NK9KI

Three charged in Malta for murder of anti-corruption journalist
https://www.nst.com.my/world/2017/12/311182/three-charged-malta-murder-anti-corruption-journalist

results in 2nd/3rd/4th quarter not getting better, maybe worst. WHY?

becos the revenues just aren't in. new fpso work cannot do billing, hence cannot recognise revenue and get $$.

some old contracts not going to the extended too.

Armada is not moving anywhere.

Something happened in South America and involves Government investigation. Are you not aware how it is linked to Armada?

Hoping for EPF? Templeton is a shark, hit and run type. Everyone knows. PNB dumped Armada. Amanah Raya not happy and vetoed at AGM.

Armada's price isn't going anywhere. Some other big news last week has happened which is a big no no in the oil and gas industry (hint : read SBM's). Will Armada disclose it?