Dof’s share went straight up: – Unreal – E24

Pricing seems wrong, Nordea’s Robert Ness tells E24.

He took a look at Dof’s bailout and compared it to market rates.

Last week, the crisis-stricken shipping company presented a plan to get its finances back on track, a package that means turning billions of debt into equity.

The plan showed that creditors would receive most of the capital, while existing shareholders were expected to be left with four percent of the value.

He thinks the cycle is ‘unrealistic’

During the trading day, the Dof stock was at NOK 1.66, and the Dof was priced at NOK 525 million.

If one assumes that existing shares will make up four percent of the “new” Dof, the price gives an implied pricing for the company of over NOK 13 billion.

That’s more than double the value Dof itself is proposing in its bailout offer, notes Nordea’s investment manager Robert Ness.

However, at the end of the trading day, Dof’s stock fell sharply. At the time of writing, the price is NOK 1.32 – giving a market value of approximately NOK 418 million.

Based on the estimates of the fleet provided by the company and the remaining debt in the company after the restructuring, the value of equity will be about 5 billion NOK.

Some companies are priced at a discount and some are higher, but that’s at least a starting point, says Ness.

– Then it became clear that today’s shareholders get four percent. Four percent of the five billion is NOK 200 million. Dof is currently valued at around 520 million. The course should have been around 60 øre, he says.

Næss asserts that the current share price of Dof Fleet is around NOK 28 billion, nearly 50 percent higher than the valuation of NOK 19.5 billion.

– It is unrealistic to be worth much more.

30% increase in three days

Dof stock ended Wednesday’s trading down 10.9 percent, but rose significantly earlier in the day.

– It’s hard to understand. You might think that working overseas is back again, everyone did a pretty good job so you think this should go well too because they were saved.

Næss points out that this phenomenon has occurred many times before, including in Norwegian and Seadrill when companies were bailed out from bankruptcy.

– Ness says many investors don’t rely on numbers.

In the past, this never happened. He says that in the past few years it has begun to appear.

NordNet investment economist Mads Johansen says Dof is among the stocks that have been traded the most among the broker’s online clients.

– You can see that there is a lot of interest in oil and oil services, especially highly efficient companies.

– I would be very keen to sit in such companies for a long time, because that would be very diluting. He says unfortunately, I was left with crumbs in Dof in refinancing.

It will cut billions of debt

Dof, like other marine shipping companies, has gone from one crisis to another in recent years, first the oil slump and then the pandemic.

But this year, the market is starting to pop up again. Many expect that there will be better times on the road, helped by higher oil prices, increased investment from oil companies, and that ships that have been stowed are hard to come back to work.

The bailout was introduced after several years of negotiations with creditors.

It must be approved by both creditors and shareholders. The plan will reduce debt from NOK 18.7 billion to NOK 13 billion and involve lighter terms on the remaining loans.

Dof has bond debt of NOK 3.2 billion. Of this amount, 2.5 billion NOK will be converted into shares, while the rest will be put into a new loan, according to the plan.

The banks will also convert NOK 3.2 billion into equity.

This would give bondholders a 53 percent ownership stake in Dove, while banks would get 43 percent and existing shareholders would get 4 percent.