Georgi Kamburov

Cal Dive International Inc. (OTCMKTS:CDVI) Gets Cut in Half

by Georgi Kamburov January 20, 2015

On December 15 the stock of Cal Dive International Inc. (OTCMKTS:CDVI, CDVI message board) dropped down to its new 52-week low of $0.0126. On the very next day however the ticker began its recovery and for nearly a month it went nowhere but up. The performance was truly impressive and on January 12 the stock had returned to $0.269 per share.

Investors who usually trade with pennystocks certainly found the opportunity to invest in an ex-NYSE company as alluring. Indeed CDVI’s balance sheet shows numbers that are rarely seen on the Over-The-Counter market. That, however, doesn’t mean that the financial results of the company are positive – at the end of the third quarter of 2014 CDVI reported gross loss of $2.2 million and a a net loss of $41 million.

In a more recent 8-K filing the company disclosed that although rather aged its fleet of vessels and diving systems were appraised by third parties at $307 million and $218.1 million, respectively.

Investors may have been excited about CDVI but the risks around the company are extremely serious. There is a reason why the stock fell down from its 52-week high of nearly $2 to its current price ranges which led to the delisting from the NYSE national exchange on December 8.

CDVI has been trying for months to refinance its $100 million first lien credit facility but so far no final solution has been reached. Although this issue alone is enough to turn the stock into an extremely risky choice the company is now facing even more troubles. The NYSE delisting represented a “Fundamental Change” under the terms of CDVI’s 5.00% convertible senior notes and now each note holder can require the company to purchase the notes at a price equal to 100% of the principal, plus accrued and unpaid interest.

In a rather bleak PR published last Thursday CDVI stated that they will not repurchase any of the Notes that are tendered which will put them in an event of default. In the same PR the company also announced that it will not be making the required $2.2 million interest payment on the Notes. If after a 30-day grace period the payment is not completed the company will be in a separate default. The press release mentioned that Cal Dive is also evaluating less satisfactory measures including seeking protection under the bankruptcy laws in order to deal with their situation.

Although the stock was already crashing as we told you in our previous article the effects of the PR were even more devastating. During last Friday’s trading CDVI wiped exactly 49.29% of its value and closed the session at $0.071. The traded volume for the day reached 6.9 million shares. Without any positive news CDVI might continue sliding down losing even more of its recent gains. 

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