Muddy Waters On Tutor Perini Corp  Big Projects  Bigger Ego  No Cash Flow [SLIDES] from Sohn San FranciscoConference yesterday – good notes on that from Market Folly

First posted at HVST

H/T  Zach Kouwe

 

But first Dave Lutz notes the following

John Rende of Copernicus capital – Bullish BMRN ·         Neal Kauffman, Hillair capital – Bullish SYRX ·         Joel Drescher – Drescher capital – Bullish on SIG ·         John Melsom – Omni event fund – Bullish SYT [drizzle]·         Marcato’s McGuire – Bullish BWLD ·         Pimco’s Mihir Worah – Buying REITs relative to the S&P / Long Nat Gas trade / volatility going up ·         Social Capital’s Chamath Palihapitiya – Bullish WDAY ·         Harvest Capital – Jeff Osher – Bullish SATS ·         JFL Capital – Joe Lawlor – Short IPO.LN ·         Muddy Waters’ Carson Block – Short TPC ·         Grantham, Mayo’s Arjun Divecha – Bullish Indian financials ·         Sun Valley Gold’s Peter Palmedo – Bullish Gold ·         ValueAct – Bullish MS
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Tutor Perini Corp – Liquidity Could be a Major Problem

• As of Q2, the company had $93.6 million of cash on the balance sheet. However, 79% of that cash is in JVs with access restrictions. TPC runs its unpredictable, negative free cash flow business (ex-JVs) on $19 million of cash on hand.

• With only $19 million of accessible cash on hand and $145.8 million of unused revolver capacity and relatively volatile cash flow, the looming $600 million in maturities due in 2018 (includes full draw on revolver) could be an issue.

• Access to the revolver could be an issue after Bank of America’s numerous amendments and restrictions on the facility.

 

tutor perini corp……….

Banks However…

Will Bank of America say “enough is enough”?

• TPC is subject to recent additional covenants regarding its liquidity, including weekly minimum liquidity requirements (based on specified available cash balances and availability under the Revolver)

• Loan agreement has been amended 6 times in 5 years, ranging from readjusting the leverage covenant higher, due to lower than expected EBITDA to higher fees and moving the maturity ahead of the bonds and lowering additional borrowing capacity.

• We believe these kinds of changes are typical of a credit facility with distressed or CCC rated credits.

• The leverage covenant is currently calculated at 3.6x vs. the covenant stepping down

to 3.25x by 4Q.

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Tutor Perini Corp: 1 in 3,000

• TPC’s shareholders have voted “no” in their Say on Pay for six consecutive years

• This is more than any other company in the Russell 3000 index

 

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Pulling It All Together

• Business that can’t consistently generate cash

• Projected earnings growth highly questionable

• Lack of management credibility

• Liquidity could become challenged

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Full presentation below

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