Leaders of Hermitage Offshore are warning investors of an unjustified rise in the share price after a wild pre-market trading rally sent the stock up more than 170% overnight.
Hermitage president Robert Bugbee took the highly unusual step of deflating the investor enthusiasm, which saw more than 1.5m shares traded overnight, in an interview with TradeWinds this morning.
The rally came despite Hermitage announcing after market close in New York on Thursday that it had retained financial advisors to negotiate with lenders, and that its auditors had expressed doubts about its ability to continue as a going concern.
Contacted regarding the share movement this morning, Bugbee was blunt.
"We are somewhat surprised as we clearly stated that the company's auditors indicated there may be going concern issues," Bugbee said.
"Personally, I do not believe that the fundamental value of the company is as high as where the stock is trading."
Investor interest in Hermitage has been fuelled by the backing of the Scorpio group, and its two key figures, Bugbee and shipowner Emanuele Lauro.
Price tripled
Hermitage shares closed on Thursday at $0.54 per share. It was trading above $1.50 in the pre-market this morning on extremely high volume. The stock typically trades only 97,000 shares per day.
It is highly unusual for a public company executive to comment on movements in the shares of stock.
After Bugbee's warning, Hermitage shares began to fall back, declining to $0.90 by late afternoon in New York, but this was still a 63% gain on turnover of 6m shares.
Hermitage on Friday made a filing with the US Securities and Exchange Commission reporting the contents of Friday's TradeWinds interview with Bugbee, presumably to more widely circulate his views with investors.
For the quarter, Hermitage posted a $6.8m loss, at least its ninth consecutive quarterly loss, and narrower than the $7.2m loss year-over-year on the back of greater charter revenue.
In January, the company entered into what it described as a restrictive $132.9m refinancing deal with DNB and SEB, backed by its 10 platform supply vessels and 11 crew boats. As part of the deal, Hermitage must keep its liquidity above $5m. It currently stands at $8.4m.
