MMA cash asset hit
Struggling oil and gas services company MMA Offshore has warned of a $140 million non-cash impairment on the carrying value of its assets in its full-year results.
“The impairment charge reflects the ongoing impact on the company’s operations of the low oil price environment which has led to a significant reduction in oil and gas-related activity in both the Australian and international markets,” MMA Offshore said in a statement.
“The company expects to recognise the impairment charge across the carrying value of the assets in each of its three operating divisions.”
MMA specified the impairments as $3 million against the Dampier Slipway, $37 million against the Dampier Supply Base and $100 million against the value of the company’s fleet of vessels.
The exact value of the impairments is subject to finalisation of the company’s full-year audited accounts.
MMA said the non-cash impairment charges would not affect the company’s compliance with its debt facility covenants.
Last month, MMA downgraded its earnings guidance for this and the next financial year with no improvement expected until at least fiscal 2018.
MMA is also struggling to sell a targeted 20 per cent of its 50strong fleet in a bid to reduce its $380 million debt.
A $78 million sales target for this year will not be met. The company is expected to deliver a full-year loss next month.
Shares in the company are trading around 10-year lows.
However, billionaire Singaporean hotels owner and Miclyn Express Offshore founder Michael Kum has been building a sizeable stake in the downtrodden company. He is thought to have amassed a stake of at least 12.8 per cent.
MMA’s asset value has suffered in the low oil price environment.