ERG 0.00% 6.8¢ eneco refresh ltd

ERG - Bank, Proton and the Smartcard

  1. 99 Posts.
    Ladies and Gentlmen

    To date there is no news about the Sydney contract and the promises of a project.

    Everyone must be wondering why. This project was guaranteed to ERG. The company was awarded preferred proponent. So much for the announcment!!!

    The company continues to linger in nowhere land. No contract no future.

    The announcement about cost cutting and all this committed project revenue does not seem to gel. If the company is so robust with revenue and opportunities why is there so much concern about cost cutting. I am sure that there must be profits around the corner.

    Just another carrot to entice shareholders to the dream.

    So now for the reality check.

    When the company refers to forward work load what are they actually referring too.

    Are they referring to the revenue collected through these mighty infrastructure projects.

    Frankly I am not really interested to hear about revenue, I am more interested to hear about future profitability after all that is what shareholder value creation is all about. A mysterious concept when you reflect on ERG's past performance.

    Revenue collection either via a project delivery or via the collection of cash through a transit system does not necessarily equate to bottom line performance.

    If Rome is an example and the fare collection revenue that is based on a % of revenue collected then there may well be a problem. Particularly where the company has indicated that project delays have impacted the refinancing process.

    This in fact tells you that the business model is not robust enough to absort any level of borrowings. Hello do you smell a problem.

    To lead on to an additional analysis of ERG. It is apparent that the company is pursuing alternative funding structure but what are financiers interested in.

    Lets consider;

    Unecumbered revenue
    Security
    Guaranteed revenue
    Positive cash flow
    Low level risk profiles
    Balance sheet security
    Low level of contingent liabilities
    Recoverable assets
    No facility breaches on existing borrowings

    This list is not exhaustive it goes beyond the balance sheet, to include business fundamentals, business integrity, business management.

    There is no certainty in ERG's ability to securitise its future through a facility arrangement where there is a plethora of other issues.

    Let us be reminded that this company had indicated that it had breached its facility arrangement. I wonder how much patience there bankers have.

    To add to the pool of issues that surrounds ERG, is the liabilities that are off the balance sheet. Contingent liabilities inclusive of performance bonds and the contingent liability associated with the acquisition of Proton.

    WOW what a great deal. in a falling technology sector, ERG entered into a transaction that guaranteed value to Proton shareholders based on the robust ERG share value.

    It looks like we have a $40 million plus contingent liability. No doubt as the ERG share price falls this amount is ever increasing.

    What does this mean to poor old ERG shareholders, more cashflow risk and further potential dilution adjustments.

    The world is full of opportunities, is this one, or one you should avoid.

    Anyone seen my smartcard. I've lost my chips at the casino. How about YOU.....

    PS I am not a shareholder both long or short. Just interested in this company and its future. Take care this stock is dangerous. Have fun.

    Bonkers has changed his name many times but behind the scene he is still in the game. You can listen to the noise or the logic the choice is yours.
 
watchlist Created with Sketch. Add ERG (ASX) to my watchlist
(20min delay)
Last
6.8¢
Change
0.000(0.00%)
Mkt cap ! $18.52M
Open High Low Value Volume
0.0¢ 0.0¢ 0.0¢ $0 0

Buyers (Bids)

No. Vol. Price($)
1 100000 4.5¢
 

Sellers (Offers)

Price($) Vol. No.
5.9¢ 8823 1
View Market Depth
Last trade - 16.12pm 14/11/2019 (20 minute delay) ?
ERG (ASX) Chart
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.