By Robert Trigaux
Tampa's Odyssey Marine Exploration, the treasure-hunting business whose bottom line can resemble the shipwrecks it is so good at finding, hopes to salvage its own future in a company overhaul.
Odyssey unveiled a complex financial deal that gives up control of the company to a Mexican iron and coal company. It's a sign of how precarious Odyssey's financial predicament has become.
Case in point: Odyssey on Monday said it lost $5.2 million in the fourth quarter, $26.5 million for all of 2014.
Worse, the sea exploration company's publicly traded shares dropped well below $1 last year and lately have hovered near 60 cents. In a business that requires lots of capital — it's expensive to search for small things deep under the ocean — Odyssey's need for more investor money has proved a constant struggle.
None of these are comforting trend lines.
Now Odyssey hopes to re-sell itself to the public as a more disciplined company that can not only find valuable shipwrecks but potentially discover even more valuable undersea mineral deposits as well. Let's break down Odyssey's reinvention three ways:
New money: A new investor in the company, Minera del Norte S.A. de c.v. (known as MINOSA), an owner and operator of mines and mineral rights, will lend Odyssey up to $14.75 million. And a MINOSA subsidiary called Penelope Mining LLC will become the majority owner by investing up to $101 million in Odyssey over three years via purchases of convertible preferred stock.
If the transaction is approved, Odyssey hopes to pursue longer-term growth rather than leapfrog from one shipwreck to the next in hopes of hitting a mother lode.
Management: Greg Stemm, an Odyssey founder and longtime chief executive, has stepped aside to become chairman and allow Mark Gordon to serve as CEO.
"We have found more shipwrecks than any other entity in history and recovered more assets than any other, combined," a bullish Gordon said.
At the same time, the CEO said Odyssey will become more picky in choosing which wrecks to salvage to improve the potential profitability of such expensive undertakings.
Salvage rights: Odyssey has its eye on such shipwrecks as the SS Central America off the South Carolina coast. Lost in an 1857 hurricane, the ship carried so much gold that public confidence in the economy was shaken, which contributed to the Panic of 1857.
The good news is Odyssey brought up lots of gold from this wreck. The bad news is it could not declare that value in 2014 as Odyssey awaits a final ruling on salvaging rights from a U.S. District Court.
Over the decades, the tale of Odyssey is one of feast or famine, fame or shame. When it's not the subject of a Discovery Channel special, it's facing attacks by short-sellers out to profit by its falling stock price.
When the market closed Monday, Odyssey shares were down 8.4 percent to 56 cents.
Handing Odyssey's fate to a new owner? It's the latest chapter in a seven seas saga.
Courtesy; Tampa Bay Times