For Non-believers!!!OPTI Canada Inc. has what many want: A chunk of an oil sands project with a stable partner in Nexen Inc. It also has something nobody wants: Financing woes.
A simple equity issue became increasingly more complicated this week when the Toronto Stock Exchange said OPTI had to get shareholder approval before selling more shares to raise $150-million. OPTI was going to sell the shares at $1.70, but the TSX nixed that because the stock closed at $2.60 before the deal was announced — a discount the regulator didn’t like.
Andrew Potter, an analyst at UBS Securities, thinks the company may just reapply when $1.70 is less than the 20% discount to the five-day average volume weighted average price. Or not.
“We believe there is still a risk that the exchange [TSX] still dissallows the financing without a vote in which case [OPTI] may need to seek alternative financing,” he said in a research note Thursday.
Mr. Potter chopped his target price down to $3.25 from $4, arguing the financing will cause dilution. And if not an equity issue, the alternative deal will cause the same. That said, he still thinks investors should buy it.