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  • Boart Longyear: Dig deep or pass the hat again

    Illustration: John Spooner.The reason Boart Longyear's share price did not get hammered far harder than it did on Monday comes down to the extreme cyclicality of the mining services sector.
    Nanjing Night Net

    This stock is as hairy-chested a punt on an uptick in the mining exploration cycle as any. And that uptick had better come quickly.

    Two years ago, Boart was tracking $US356 million in earnings (EBITDA) and a share price above $3. In the latest half, EBITDA came in at a measly $US27 million and the company is being rapidly subsumed by the interest payments on its debt.

    Unlike Forge, for instance, Boart has a high-tech products division that manufactures rig equipment. That could be sold. And it is the biggest owner and hire group of drill rigs in the world by a long shot.

    Still, it faces an uphill battle to survive with its equity intact. The release of Boart's 2013 earnings on Monday paints a sombre picture.

    Earnings as measured in EBITDA have all but evaporated. In the final three months of the half it managed only $US8 million.

    To be fair to Boart, the December and January months are the seasonally low months. With its drill rig capacity utilisation running at historic lows, however, the outlook for the present six months is difficult. It is fair to expect that with such low capacity utilisation pricing pressure on any new contract, wins will continue to be intense.

    Just last October in its management update after its emergency debt refinancing, the commitment was to achieve a target net debt level of less than one times its cyclical low in its EBITDA. The prospect of achieving this is slim given it would require net debt to be slashed by $US500 million.

    A few basics: Boart is carrying about $US600 million in gross debt, its annualised EBITDA run-rate, applying the most recent half year, is $US54 million.

    The group has annualised cash interest commitments of $US52 million and its normalised capex requirements - just to maintain the drill rig fleet alone - run between $US50 million and $US75 million, according to an October 2013 refinancing presentation.

    It is now flagging a 2014 maintenance capex spend of just $US25 million. Management is keen to provide comfort to bond investors, that they will receive their coupon payments, though questions may be raised by the group's competitors about drill rig fleet quality if maintenance capex is cut to the bone.

    Its main rival, Canadian-based Major Drilling, although facing the same sector headwinds, is net cash and doesn't have pesky bond-holder coupon payments to worry about.

    Boart's net debt has not blown out in the past six months as Boart has undergone an aggressive working capital release.

    But the problem is that working capital can be released only once and it appears that management has already taken the low hanging fruit, having reached its goal of reducing inventory levels down to $US300 million, with December inventory standing at $US299 million.

    Cost reductions are offset by pricing declines in the high single digits and continued pricing pressure seems highly likely with utilisation rates so low.

    Current drill rig capacity utilisation is running at roughly 30 per cent (it was 45 per cent in the June quarter) and as pricing pressure is only really starting to bite now Boart is in a fight for its life. It has announced yet another deal on its key senior bank debt covenants - the third such renegotiation in the space of six months.

    Bear in mind, this is a company that in 2009 trebled its shares on issue via a deeply discounted jumbo recapitalisation. At the time of the last recap, Boart's shares were trading at 44¢ with the new issue priced at 27¢ ($4.40 and $2.70 in present-day terms given a 10-for-one share consolidation in May 2010).

    So Boart has form when it comes to putting the hat around. It was only in October last year that the board said there was no current intention to raise fresh equity to address the highly geared capital structure.

    It was effectively rolling the dice, punting on the prospect of a turnaround in market sentiment.

    Now all options are on the table - including asset sales and equity raisings - in order to reduce leverage to a more sustainable level through the cycle.

    This may be a bitter pill to swallow for existing shareholders, but what are the alternatives?

    Will institutional investors be prepared to tip in again given past raisings, present fundamentals and the uncertainty of a near-term upswing in the cycle?

    And is there enough free cash flow to service interest payments if things don't pick up? The holders of that $US600 million in debt might be looking for a pre-emptive exit.

    Management flagged on Monday's conference call that it would not be until late March when a clearer picture emerged of how utilisation was shaping up for 2014. Having rolled the dice and taken the company to the brink, the board has some tough decisions to make come April.

    This story Administrator ready to work first appeared on Nanjing Night Net.

  • RIP Geoff Wilson, a true racing man

    Geoffrey Alan "Woolley" Wilson grew up in Gosford close enough to the race track to hear the PA system, and it was like a siren call that lured him into a life of racing.
    Nanjing Night Net

    He was born on April 1, 1957, but he was nobody's fool.

    He never strayed too far from the Central Coast, and lived there with his late mum June and his dear dad Al all his life.

    He started his journalism career at the Gosford Examiner before joining the Newcastle bureau of News Limited in 1980, then moving on to the Daily Mirror in Sydney.

    His racing colleagues at the Mirror gave him his nickname, ironically taken from the champion greyhound Woolley Wilson.

    He came to the Newcastle Herald by chance in 1996 on a casual placement, and we instantly loved this bloke whose passion for racing shone through in his vibrant writing.

    Woolley had a line to the biggest names in racing, but he loved equally to tell the stories of the battling trainers, the jockey struggling with his weight, the coat-tuggers, and the small-time owners who had the luck to get themselves a handy horse.

    It didn't matter whether it was a Broadmeadow maiden, a Golden Slipper, or Choisir winning at Royal Ascot, Woolley gave them the same treatment.

    One of the first racing stories he wrote for the Herald was on a bush trainer who had picked up a lame horse that had been written off as a racing proposition.

    The trainer turned the horse out in a steep paddock with a stream that ran along the bottom, and he put the horse's feed bin at the top of the hill. The horse would make the trips up and down the slope between food and drink and slowly, over many months, walked its way back to fitness and back into the winner's stall.

    Woolley had a million stories, many of them concerning his own bad luck on the punt.

    Once, long before the days of pub TABs, he had given a winning daily double ticket to a mate to collect for him when he went to put a bet on. Sadly, the poor chap collapsed and died en route with Woolley's ticket in his top pocket. His widow remarked later how unusual it was for him to take a daily double, but it had paid for the funeral.

    "Just another way to do your dough," Woolley would say.

    (Woolley once wrote a column for the Herald on the perils of punting. We illustrated it with a cartoon of him placing a bet on horse called "Sure Thing", which was the even-money favourite. As Woolley walks away, the bookie winds Sure Thing out to 100-1.)

    There were the good luck stories, too.

    For a time, Woolley would host a lunch on the day before the Melbourne Cup for Newcastle punters on the annual Kerry Phillips Great Events tour.

    On one of those occasions, Woolley got the champion jockey Darren Beadman to come along as a guest speaker.

    Afterwards Beadman, who had returned from his famous sabbatical from racing as a lay preacher, signed autographs and added "John 3:16".

    This is, of course, one of the most famous verses in the Bible: "For God so loved the world, that he gave his only begotten Son that whosoever believeth in him" etc etc.

    But some took the numbers to be a tip and the next day backed number 16 in race three, which was a moderately performed conveyance named Sophie Princess paying $34. It won, of course.

    "The Lord works in mysterious ways," Woolley chuckled.

    Some of Woolley's best stories were not for publication.

    "It's only a rort if you're not in on it," he would say.

    Early in his career as a racing writer he visited the home of a country trainer who had enjoyed his share of success.

    On the walls were photographs of Slipper winners and Derby winners, but pride of place was taken by an ornate oil painting of a horse Woolley had not heard of and whose record, listed on the frame, showed only two wins from 50-odd starts.

    "Why is this bloke so special," Woolley asked. "He only won two races."

    "We only tried twice," replied the trainer with a twinkle in his eye.

    Woolley believed that the secret to punting was to watch races.

    "Seeing is believing," he said. "Watch races – anywhere, any time, and look for winners."

    He used that philosophy when he declared Green Moon to Herald readers before the 2012 Melbourne Cup. The year before the horse had won the Newcastle Cup in outstanding fashion.

    Strangely, a seemingly disappointing seventh in the Cox Plate leading up to the Cup only reinforced Woolley's opinion that Green Moon was unbeatable. He won and paid $22.

    He was all about confidence, was Woolley.

    "Old racing proverb: Money lost, nothing lost; confidence lost, everything lost," he once told this $5 each-way punter during a lean spell.

    His favourite horse was Kingston Town.

    "He won from 1200 metres to 3200, he won 30 of 41 starts, three Cox Plates in a row, 14 group 1s," he would recite.

    "When he was racing of a Saturday, you couldn't sleep the night before, because you knew something special was going to happen.

    "Don't talk to me about Black Caviar."

    Woolley was in his twenties when he was diagnosed with type 1 diabetes.

    He tried to manage the insidious disease as best as he could but, as the long-suffering staff at the Gosford renal unit will attest, he was never the best patient.

    Those nurses and his fellow patients became like a second family to Woolley, and he always shouted everyone coffees if he'd had a win on the weekend.

    His problems became almost insurmountable when he suffered a fall in 2011 that left him in a wheelchair.

    But he battled on, and was able to work from home with the aid of Sky Channel and his constantly ringing phone.

    Against all odds, we got him online, and he joked that "www" stood for "World Wide Woolley".

    And he was forever grateful to the racing community for the way they kept him in the loop.

    Long calls with Woolley were a staple of the working day, always full of laughs, gossip and tips – his voice full of life but often masking the pain he was in.

    His love for his craft kept him going when most would have called it a day.

    "I've got one for you," he would say when he had a good yarn, and then he would bash it out and email it up.

    And bash it out he would. He was never the greatest typist, and he had glasses like the bottoms of Coke bottles.

    I can recall a rookie sub-editor at the Herald throwing his hands up in dismay when he tried to unscramble Woolley's copy.

    "It's like cracking a code," one of the old hacks advised. "You just have to work out which keys he had his fingers on when he started typing."

    As good a bloke as Woolley was, he had a fierce temper and his blow-ups were legendary.

    When Woolley felt that things weren't right, he let you know.

    He graded his blow-ups according to racing terminology, and you didn't want to be on the end of a group 1 spray from Woolley.

    Usually though, they blew over as quick as they blew up.

    The best I saw was in Melbourne after Derby Day in the late '90s.

    Newcastle trainer Paul Perry had won a race with horse called Bezeal Bay.

    Woolley had declared it, and a crew of us from Newcastle had backed it and cheered it all the way down the long Flemington straight.

    Afterwards, Woolley took us to a Chinese restaurant he had discovered. But the service was painfully slow, and as the mob got hungrier the tension mounted in Woolley until ... what transpired does not bear repeating in a family paper.

    As we were marched out of the restaurant I said to the bride: "One day you'll look back on this and laugh."

    "No I won't," she replied, and she never has. But I have – many, many times – and I am now as I write this. It was just before Christmas when Woolley finally became too ill to work.

    He was admitted to Gosford Hospital where, on top of everything else, he couldn't watch the races.

    But things took a turn for the better last week when he moved in to a nursing home.

    On Sunday, he got Sky Channel hooked up, and his great friend Frances O'Shea reported that he was in fine spirits.

    "He was even talking about writing some stories," Frances said.

    On Sunday night, though, Woolley took a turn for the worse.

    He died peacefully on Monday afternoon, a racing man to the end.

    This story Administrator ready to work first appeared on Nanjing Night Net.

  • New Blue up and running

    ADELAIDE 0.1.2 0.4.3 0.8.5 1.13.12 (99)CARLTON 0.2.4 0.5.5 0.8.6 0.9.7 (61)Nine pointers: Adelaide: P Dangerfield. Goals: Adelaide: McKernan 3, Jenkins 2, Otten, Rutten, Petrenko, Podsiadly, Porplyzia, Dangerfield, Douglas, Sloane. Carlton:Ellard 3, Everitt, Curnow, Garlett, Casboult, Menzel, Scotland. Best: Adelaide: Douglas, Thompson, Jaensch, Dangerfield, McKernan, Sloane. Carlton: Murphy, Gibbs, Simpson, Thomas, Buckley, Everitt. Injuries: Adelaide: J Podsiadly (bruised hip). Carlton: B Gibbs (general soreness) C Yarran (general soreness).Umpires: Chris Kamolins, Scott McPhee, Brendan Hosking. Venue: Etihad Stadium.
    Nanjing Night Net

    Just as his team will play better games, Dale Thomas will play better games for his new club Carlton.

    But the very fact Thomas was playing senior football again was reason enough for Carlton fans to walk away content with what they saw in an otherwise underwhelming match against Adelaide at Etihad Stadium on Monday night.

    Certainly the match will have left only the Crows pleased with what they saw from their team as opposed to the efforts of individuals, but with a match in February that is almost beside the point.

    Thomas did more than he might have hoped to be able to do in his first outing for Carlton. He got a handsome amount of the ball and ran searchingly. Predictably he tired and was heavily rotated, but he worked into the game impressively.

    He played from a half-forward flank which, of course, meant that he also got the ball across half-back and ran deep with it as a link player. What he gave Carlton was a lift in quality of the delivery of the ball inside 50.

    The former Collingwood star did not take a turn through the centre of the ground, but that was not surprising for a player playing his first even semi-serious game since re-injuring his ankle in round 20 of the VFL last year. His last AFL game was in round seven last year - the last of just five games for the season.

    As critical as the form of the high-profile free agent was the form of another recruit, Andrejs Everitt. The rangy half-forward gave the Carlton forward line that extra player who was difficult to match up on, someone who is tall and marks well but is still nimble and quick at ground level.

    Carlton's first-round pick, Patrick Cripps, is a powerful, ready-to-play midfielder who showed he will give the Blues what they want from him as an inside midfielder.

    Dylan Buckley had an impressive night with run and dash linking play through the middle of the ground and a keenness to take the game on and break lines.

    Sam Rowe was sampled as a key defender after playing as a forward and part-time ruckman last season.

    Matthew Kreuzer, recovered from the foot complaint that cost him his semi-final place last season and affected his early pre-season, looked better as the game wore on. He began playing out of the goal square, but looked better when he moved into the ruck.

    James Podsiadly, at his new club, kicked the first goal for the Crows, while Eddie Betts will wait to play his first game against his old club.

    The Crows slipped the chain in the last quarter when Paddy Dangerfield moved into the middle to instant effect. He booted a super goal and another six-pointer as the Crows monstered Carlton in the middle of the ground, dominating the clearances. They completely overran the Blues in the last term.

    Carlton was without Chris Judd - his Achilles will keep him out until round three - and Andrew Carrazzo, who has injured a calf and will miss the first two rounds of the season. Lachie Henderson will play soon after minor thigh surgery and should yet be fit for round one, while Andrew Walker, Robert Warnock and Zach Tuohy were all rested.

    This story Administrator ready to work first appeared on Nanjing Night Net.

  • Brumbies to go on attack against Western Force

    Injured Brumbies No.8 Fotu Auelua is still two months away from playing. Photo: Jeffrey ChanInjured No.8 Fotu Auelua says the ACT Brumbies have the players and ability for a more attacking game plan and they won't ''shy away'' from that against the Western Force in Perth on Saturday, despite their ''messy'' loss to Queensland Reds.
    Nanjing Night Net

    And he said fullback Jesse Mogg's relaxed character would help him move on from his costly fumble and ''rewrite his mistakes'' this weekend.

    Auelua is still two months away from returning after damaging his medial ligament in a pre-season trial, but the specialist was happy with his progress on Monday.

    The powerful ball-runner has been doing conditioning work in the pool, as well as restricted weights, but he won't be out of his knee brace for another 4-5 weeks.

    He told Fairfax Media earlier this year that he'd struggled with post-surgery depression after having a shoulder reconstruction last year. But he is in a much better state of mind at the moment.

    Auelua said having fellow injured Brumby Christian Lealiifano (ankle) had helped him deal with the mental blow of missing the first half of the 2014 Super Rugby season.

    Plus Wallabies coach Ewen McKenzie had said he was still in his plans for the mid-season Tests against France despite the injury.

    ''I kind of had my down days with the shoulder and obviously the day I did my knee I was pretty shattered, you kind of beat yourself up a little bit, but coming back from that is not that far away and you just need to focus on getting back on the field,'' Auelua said.

    He said it was frustrating watching Saturday night's 27-17 loss to the Reds from the grandstand, where the Brumbies were their ''own worst enemies''.

    And he said the loss, plus the Force ''smacking them round the park'' in Perth last season, would have the Brumbies ''pretty angry'' when they run out at nib Stadium.

    Auelua felt the experience of players like David Pocock, who will play his former club in a Brumbies jersey for the first time, Matt Toomua and Henry Speight would be crucial in lifting the province. And he said the team backed captain Ben Mowen's decisions when it came to opting to either take the penalty shot or kick for a lineout in the corner.

    ''We back our ability to score tries and our attacking game,'' he said.

    ''We don't want to be a team that will shy away from scoring tries, we want to score tries every game and last weekend didn't showcase any of our attacking ability.

    ''We've got the players and the ability to play that style of rugby.''

    Mogg produced a mixed bag against the Reds - scoring a try, getting held up across the line and fumbling a kick that led Queensland to put the game beyond reach in the dying minutes.

    But Auelua backed Mogg to ''let it slide''. It was the 24-year-old's first Super Rugby game since having a shoulder reconstruction last year after making his Wallabies debut.

    ''Jesse is one of the key players in the team,'' Auelua said.

    ''He had some great moments and some not-so-great moments - those kind of moments either make or break you, but the good thing about Jesse is he's got that relaxed atmosphere about him where he can let it slide.

    ''This weekend he'll want to rewrite the mistakes he did … and he's only going to get better.

    ''That's the dangerous thing, we haven't got the best out of him yet.''

    ■ SATURDAYWestern Force v ACT Brumbies at nib Stadium, Perth, 10pm.

    This story Administrator ready to work first appeared on Nanjing Night Net.

  • Amelia Ross and Nicola Owen on board with new direction

    NEW TALENT: Nicola Owen and Amelia Ross will compete at the state age surf lifesaving titles this weekend. Picture: Peter Stoop NCH SPORT - Nicola Owen and Amelia Ross will compete in the NSW Surf Life Saving Age Ttles at Ocean Beach this weekend - shows them with their boards on Merewether Beach --- 24th Feb 2014 photo by Peter Stoop
    Nanjing Night Net

    NCH SPORT - Nicola Owen and Amelia Ross will compete in the NSW Surf Life Saving Age Ttles at Ocean Beach this weekend - shows them with their boards on Merewether Beach --- 24th Feb 2014 photo by Peter Stoop

    MEREWETHER duo Amelia Ross and Nicola Owen are hoping hard work and some tips from top board paddling coach Ross Blatchford can help them snare a medal for their club.

    Their club is competing at the NSW Surf Life Saving State Age Championship this weekend.

    Amelia and Nicola represent the Merewether club's work to develop junior talent and match them with traditionally strong Hunter clubs such as Swansea-Belmont and Redhead.

    The under-13 pair were part of the Hunter team at the NSW interbranch titles.

    It was a rare double selection in an age group for Merewether.

    The club's junior activities co-ordinator, Mark Owen, said the achievement came from greater development.

    The biggest change has been luring Blatchford to guide the likes of Amelia and Nicola, who will attempt to medal in the under 13s board relay at Ocean Beach on the weekend.

    "We've got a coach now teaching board skills a couple of times a week and we've tried to lift the profile of a competition squad," Owen said. "It's a slow process. It takes a couple of years to get there but we've certainly made some big gains.

    "We're trying to expand on that for next year, with coaching for some swimming and beach running."

    Amelia and Nicola were fourth in the under 13 girls board rescue at the NSW interbranch titles.

    Amelia was also fourth in the individual surf race and fifth in the ironperson.

    She warmed up for the state titles at the Hunter Branch Championship at Caves Beach two weeks ago when she won the ironperson and board race and finished second in the swim.

    Nicola was second in the board and third in the swim while the pair finished second in the board rescue and were part of runner-up efforts in the board relay and beach relay.

    The girls are part of a strong Hunter assault on the state age titles, which start on Friday.

    Redhead's Bailey Proud and Catherine Hill Bay's Lachlan Stanford starred in the under 14 boys section at the Hunter titles; they won three gold medals each.

    Fingal Bay's Maya Stewart claimed the sprint double in the under 14 girls.

    Zach Morris (Swansea-Belmont), Kyle Lehmann (Catherine Hill Bay) and Heath Hall-Muir (Cooks Hill) will lead the Hunter charge in the under 12 boys after gold medals at Caves Beach.

    Bella Williams (Cooks Hill) claimed four victories in the surf at Hunter in the under 11 girls division while the Cooks Hill trio of Saxon Coates, Fletcher Myers and Tom Sargeant dominated the boys section.

    Grace Hewitt (Fingal Beach) and Erin Petitt (Swansea-Belmont) were standouts in the under 10 girls.

    Blake Gribble, Blake Cook and Mitch and Jake Morris from Swansea-Belmont took all before them in the under 9 boys while Newcastle's Jade Archer won four gold medals.

  • ‘Fools’ gold flows for Boart’s CEO

    You know things are going well when a company is paying more than 2.5 per cent of its market value to retain a CEO who has not clocked up his first year. Maybe the April 1 starting date was not a good omen for Boart Longyear's newish chief, Richard O'Brien.
    Nanjing Night Net

    The drilling services outfit unveiled more details of a $US5 ($5.6)-million-CEO retention plan with the news of its $US620-million loss for the year and ''certain risks'' outlined in the financial report that ''give rise to material uncertainty about the company's ability to meet its financial obligations as and when they come due''.

    Still, ''Abort'' Longyear was crowing about O'Brien's hiring even if we're not sure he feels the same way. Abort Longyear's market cap is now below $200 million. O'Brien's previous gig was at Newmont Mining Corp. Its current market cap is $US11.6 billion.

    Still, in a wonderful display of solidarity, O'Brien's $US5-million ''strategic award'' is in cash payments stretching out until April Fools' Day 2016.

    The board said it ''may'' seek investor approval to convert part of the grant into options. And, of course, his payments are not guaranteed. We are sure investors will be chatting with chairman Barbara Jeremiah before the AGM.

    Payments will be made ''provided that vesting and payment would not result in the company breaching any financial covenants''. In this case, vesting would be deferred until the financial position of the company ''accommodate[s] payment''.'Ernest' advice

    You would not pick Ernest Hemingway as an obvious philosophical influence for the Abbott government's Commission of Audit.

    The head of the team, Tony Shepherd, tossed aside conservative favourites, such as Ayn Rand, in favour of the author in his opening comments at a Senate select committee hearing.

    ''As a businessman, I recognise that debt, when used imprudently and in excess, can lead to serious problems and to disaster, in some cases. I quote from Hemingway, one of my favourite writers, from his book The Sun also Rises. The hero in that book is asked: 'How did you go bankrupt?' He said: 'Two ways: gradually and then suddenly'. ''

    In any case, Hemingway may be a safer bet than one of Rand's more famous quotes: ''A government is the most dangerous threat to man's rights: it holds a legal monopoly on the use of physical force against legally disarmed victims.''

    We're sure Shepherd thinks that not all government is bad. Especially if he held on to his 216,383 shares in Transfield Services after stepping down as chairman last year.

    The stock jumped 25 per cent after the government handed it a $1.22 billion contract to run immigration detention centres on Nauru and Manus Island.

    Say, isn't Shepherd looking for some cost savings?Vulture capitalists

    It appears financial engineering behemoth Blackstone can show the Aussies a thing or two when it comes to the dark arts of profiting from the failure of others.

    The group is attracting attention for its surgical skills on Eircom - once a plaything of the now defunct Babcock & Brown group.

    A story in The New York Times reports how Blackstone was buying up Eircom's discounted debt in the lead up to its default in 2012 - the largest in Irish history.

    In return for a debt restructure that sheared off most of Eircom's onerous debt burden, Blackstone received a 25 per cent equity stake in the Irish telco incumbent which was also shorn of a couple of thousand staff.

    It did the trick. Analysts now value Eircom at around $US3.3 billion.

    Sinn Fein leader Gerry Adams complimented Blackstone with the label ''vulture capitalists'' on the floor of Ireland's parliament, according to the report.

    Got a [email protected]南京夜网.au

    This story Administrator ready to work first appeared on Nanjing Night Net.