Tim Eriksen Road Less Traveled
Tim Eriksen Road Less Traveled
www.ValueInvestingCongress.com
NOT AN OFFER TO BUY OR SELL SECURITIES - Please note that this presentation does not constitute an offer of interests of Cedar Creek Partners, LLC. Such an offer will only be made by means of a Private Placement Memorandum to be prepared and furnished to the prospective investor at a later date. The statements in this letter are preliminary and subject to change and are qualified in their entirety by the terms of such Private Placement Memorandum. In the event of any inconsistency between this letter and the Private Placement Memorandum, the Memorandum shall control. All persons wishing to invest in Cedar Creek Partners, LLC must receive, read, and understand the Memorandum and execute the accompanying Subscription Agreements. The information contained in this presentation is confidential, has been prepared solely for the information of the persons to whom it has been delivered and should not be reproduced, distributed (except to the professional advisors of the recipient, for the purpose of rendering professional advice to the recipient) or used for any other purpose. RISK FACTORS - An investment in Cedar Creek Partners, LLC may involve substantial risks, including the risk of loss. All of these risks are described in greater detail in the Private Placement Memorandum. TAX RISKS - An investment in Cedar Creek Partners, LLC involves tax liability which will depend upon the limited partners individual circumstances. Prospective investors should read the Private Placement Memorandum and consult their own tax advisors with respect to the tax consequences arising from investment. OTHER - The foregoing list of risk factors does not purport to be a complete examination of risks involved in the offering. Potential investors should read the entire Memorandum before deciding to invest in the partnership. PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE PERFORMANCE, AND YOUR INVESTMENT RETURNS MAY VARY CONSIDERABLY FROM THOSE PRODUCED IN THE PAST. FURTHER, YOUR INDIVIDUAL RESULTS MAY VARY FROM THE FUND RESULTS DEPENDING UPON THE TIMING OF YOUR INVESTMENT.
Education: M.B.A. Texas A&M University 97; B.A. The Masters College 91
Experience: Walkers Manual Inc. 04-06 - Covered unlisted, MicroCap and Community Bank stocks. Peter Kiewit & Sons 99-04 - Administrative Engineer on $600 MM Benicia-Martinez Bridge.
Tim Eriksen
18.1%
7.6%
7.9%
8.0%
6.8%
2.00%
0.00% Cedar Creek DJIA Nasdaq Russell 2000 S&P 500
Average Annual Return Since Inception
Inception January 15, 2006. Through February 28, 2014. Net of fees and expenses.
Nasdaq excludes dividends due to immateriality. S&P 500 returns measured by S&P 500 Depository Receipt Trust (SPDR) ticker:SPY. See Appendix A for additional information.
$400,000
$350,000 $300,000
$386,482
$250,000
$200,000 $150,000 $186,322 $170,741
$100,000
$50,000 $7/1/06
7/1/07
7/1/09
7/1/08
1/1/08
1/1/10
1/1/06
1/1/07
1/1/13
1/1/09
7/1/10
Inception January 15, 2006. Through February 28, 2014. Net of fees and expenses.
S&P 500 returns measured by S&P 500 Depository Receipt Trust (SPDR) ticker: SPY. See Appendix A for additional information.
7/1/12
7/1/13
1/1/14
1/1/12
1/1/11
7/1/11
Mkt Cap 6.0 0.6 1.0 1.0 2.0 4.7 1.7 12.8 178.4
Adj. Infl. 54.0 5.4 8.2 8.5 17.0 37.6 13.4 102.4 1,338.3
Adjusting for inflation, Warren Buffett spent his first decade focused on what we today would call nano-caps (the smallest micro caps).
Adjusting for inflation, Warren Buffett spent his second decade focused on small caps and acquisition of micro caps.
UK based drilling operator. 48.7% owned by Awilhelmsen AS. Owns and operates two mid-water semi-submersible (< 3,000 ft.)
with GlobalSantaFe. In order to gain approval for the deal, Transocean was obligated by the UK Office of Fair Trading to reduce its exposure to UK waters (North Sea). In other words = a forced sale.
Shares trade on Oslo Stock Exchange (AWDR) and otc (AWLCF)
August 2008: Transocean agrees to sell the two rigs to Northern Offshore
for $750 million. October 2008 Northern Offshore terminated the deal
January 2010: Acquired two rigs for $205 million. $165 million of seller
provided credit (9%) and $50 million of equity (which also provided $10 million of working capital). Awilcos Purchase Price: RIG 10 Loss on Sale: RIGs 09 Impairment: RIGs 08 Impairment: Transoceans 07 Carrying Value: Awilco Purchase Price $205 million $ 15 million $279 million $ 97 million ~$596 million 34%
on Oslo exchange.
January 2013: starts trading in US otc market May 2013: Pays first quarterly dividend of $1.00 per share March 2014: Announced intent to issue $125 million bonds to repay
existing debt of $95 million and use the remaining balance for general corporate purposes.
Price Shares Mkt Cap Cash Debt EV EBITDA EPS ttm Div Yield
$ $ $ $ $ $ $ $
20.30 30.0 609.6 52.3 98.1 655.4 159.4 4.07 4.40 21.7%
Chart: Yahoo! Finance Note: Limited liquidity Average Daily Volume: AWLCF 45,421 shares AWDR 70,578 shares
In millions Contract Revenues Total Revenue Rig Operating Provision Debts G&A Depreciation Operating Expense Operating Profit Net Financial Profit Before Tax Tax Net Profit EPS Shares Dividend $ $
Mar-12 19.5 22.6 13.8 2.5 2.9 4.4 23.6 (1.0) (3.6) (4.6) 0.6 (4.1) (0.14) $ 30.0 - $
Jun-12 32.1 32.5 14.9 0.7 3.0 4.5 23.3 9.3 (3.5) 5.8 (0.6) 5.2 0.17 $ 30.0 - $
Sep-12 43.4 44.4 13.4 3.0 3.5 4.4 24.6 19.8 (3.6) 16.2 (1.8) 14.4 0.48 $ 30.0 $
Dec-12 51.8 52.8 14.4 3.6 1.7 4.2 24.4 28.4 (3.6) 24.8 (1.8) 22.9 0.76 $ 30.0 - $
Mar-13 52.3 53.4 13.6 5.4 4.4 23.8 29.5 (2.5) 27.0 (2.3) 24.7 0.82 $ 30.0 - $
Jun-13 58.7 59.5 13.2 5.5 4.4 25.3 34.2 (2.3) 32.0 (2.6) 29.4 0.98 $ 30.0 1.00 $
Sep-13 61.4 62.3 13.5 4.3 4.4 20.3 41.9 (2.3) 39.6 (3.0) 36.6 1.22 $ 30.0 1.00 $
Dec-13 60.7 61.4 16.3 5.7 4.4 25.3 36.1 (2.2) 33.9 (2.3) 31.6 1.05 30.0 1.10
WilPhoenix (previously known as Arctic II) Built: 1982 Upgraded: 2011 3rd Generation
Friede & Goldman L-907 Enhanced Pacesetter
upgrade: increased variable deck load, four new lifeboats, new sewage plant, engine overhaul, new SCR system, improved mud mix and solids control systems, increased main deck, new accommodations for 110 persons, etc.
WilPhoenix-
WilHunter (previously known as Arctic IV) Built: 1983 Upgraded: 1999 and 2011 3rd Generation Friede & Goldman L-907 Enhanced Pacesetter 1,500 ft water depth / 25,000 ft drilling depth Was contracted out to Transocean at time of acquisition Sent to Remontowa yard in Poland in November 2010 for classification renewal. In Dec. 2010 an accommodation upgrade, increased office space, and a dedicated heli-lobby was added to the project scope. Redelivered in May 2011
WilHunter-
Water Depth
about 600 ft about 1,000 ft about 1,500 ft about 3,000 ft about 7,500 ft about 10,000 ft 200 m 300 m 500 m 1000 m 2500 m 3000 m
Dates
Early 1960s 19691974 Early 1980s 1990s 19982004 20052010
In deeper waters, drill ships are subject to significant heave, pitch, and yaw motions in large waves. Semi-submersibles were developed to provide more stable drilling platforms. A semi submersible obtains its buoyancy from ballasted, watertight, pontoons located below the ocean surface and wave action. The operating deck is located above the tops of the passing waves. Structural columns connect the pontoons and operating deck.*
* Source: http://www.oceanstaroec.com/fame/2000/semisubmersible.htm
Per the 2010 PP, both rigs will compete with any mid-water
its rigs, following the upgrade and maintenance, are among the better rigs available in the UK mid-water drilling market. end of 2015/early 2016. Projected cost of $20 million per rig. Replace BOP (Blowout Preventer) at total cost of $45 million. BOPs are typically the #1 cause of semi sub rig downtime.
Risks: Existing contracts could be terminated. Decline in oil/gas prices Supply/Demand change result in rig being idle Since Awilco has only 2 rigs, downtime materially affects revenue and income. Political risk regulation and taxation Operating risk accident, equipment breakdown, terrorist attack, etc.
Price
Price Shares Mkt Cap Cash Debt EV EBITDA EPS ttm Div Yield
$ $ $ $ $ $ $ $
20.30 30.0 609.6 52.3 98.1 655.4 159.4 4.07 4.40 21.7%
Chart: Yahoo! Finance Note: Limited liquidity Average Daily Volume: AWLCF 45,421 shares AWDR 70,578 shares
QUESTIONS?
As of 3/28/14. OTC/Pink Sheet stocks priced at bid. Market cap in millions. Top 10 based on valuing position in AIG via LEAPs at market and not on a look through basis
Management Fees: 1.25% Incentive Fees: 20% High Water Mark: Yes Hurdle: none Minimum Investment: $50,000 (increasing to $100,000 on 7/1/14) Lock Up: 1 Year Withdrawals: Monthly Audit Benson & Neff Legal Richardson & Associates Administrative Unkar Systems Prime Broker BTIG Custodian Goldman Sachs Independent Party Tom Vance, Vance & Blair LLP
Appendix A
The S&P 500 Returns are reported using the S&P 500 Depository Receipt Trust (SPDR) which trades under the ticker symbol SPY, as reported on Yahoo! Finance. Reinvested dividends are included in these figures. A spreadsheet showing SPY performance versus the Cedar Creek Partners Fund is available upon request. Current year results for Cedar Creek Partners are unaudited. Nasdaq results exclude dividends due to their immateriality.
Past results are no guarantee of future results and no representation is made that an investor will or is likely to achieve results similar to those shown. All investments involve risk including the loss of principal.
Fund trade history available upon request.