First posted at HVST
Q2 Hedge Funds Resource Page Now LIVE!!! Lives, Conferences, Slides And More [UPDATED 7/12]
Simply click the menu below to perform sorting functions. This page was just created on 7/1/2020 we will be updating it on a very frequent basis over the next three months (usually at LEAST daily), please come back or bookmark the page. As always we REALLY really appreciate legal letters and tips on hedge funds Read More
But first Dave Lutz notes the following
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.
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.
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
Pulling It All Together
• Business that can’t consistently generate cash
• Projected earnings growth highly questionable
• Lack of management credibility
• Liquidity could become challenged
Full presentation below