Is Norse mythology working for Azgard Nine?

The countrys second biggest textile composite in terms of market capitalization, Azgard Nine saw its profits lopped by more than 90 percent in the year ending December, despite a 16 percent increase in topline revenues.
The firms cost of sales rose, resulting in weaker margins. But the biggest dent came from lower other income, which dropped from Rs772 million in 2008 to Rs197 million in 2009.
Yet, that doesn justify the kind of bashing the firms stock has been receiving on the Karachi Stock Exchange in the past many months.
The firm, which is named after Azgard, one of the nine worlds in Norse mythology, with the logo symbolizing a place where he gods reside, is in a financial quagmire - not the kind of place, where those mythical gods would like to rest.
But perhaps, here in, comes the Nine into play. Applying some kind of financial wizardry, the firm is juggling and changing its financing structure, just as the number nine represents change and ransformation, according to the Chinese culture as embodied in the firms name.
The firm has recently embarked upon a project to fulfill its debt payment on time, given that it has to retire nearly Rs7 billion in liabilities during the next two to three years.
Sources familiar with the situation, have told BR Research, that the firm is currently under negotiations with its stakeholders to increase the tenure of its debt repayment.
The liquidity issue was first brought to light when the company started facing difficulties in the redemption of its preference shares. Half of the 66 million preference shares, net of conversion, issued in 2004 were due to be redeemed in September 2009, while the remaining half will be due in September this year.
Out of the 33 million preference shares due last year, ANL has so far managed to redeem almost 8.66 million shares against cash while the rest 24.39 million were agreed to be redeemed through privately placed TFCs, mainly belonging to the sponsors.
Thats how the rating agency PACRA realized that it needed to revisit its models. Subsequently, PACRA downgraded ANLs long-term and short-term rating to A- and A2, respectively.
The second blow to stakeholders came when the company deferred the principal repayments to its TFC holders, amounting Rs160 million due on March 2010, for two months effective from April 02, 2010.
So in essence, it became a great concern for all the stakeholders and primarily, investors, since first and second principal payment of TFC III are also due in the current year.
Though, the company has liquidity on its balance sheet, the cotton buying season has limited its ability to pay debtors. In the face of all theses issues, ANLs management has chalked out a plan to reduce the mismatch between the companys assets and liabilities.
First, it issued rights shares amounting to Rs1 billion last year, then it recently divested its holding in Agritech Limited (formally Pak American Fertilizer limited), and raised nearly Rs2.4 billion. However, PACRA is of the view that divestment of strategic investment has provided a limited cushion to the business and has placed rating on a watch with negative implications.
How soon will the firm be able to resolve its issues, the market doesn know yet. And thats perhaps why investors have been expressing their lack of confidence in the stock.