Globe says even under $1, Oilexco could be losingGlobe says even under $1, Oilexco could be losing bet
2008-12-23 06:55 ET - In the News
TheGlobe and Mail reports in its Tuesday edition that Frederick Kozak, ananalyst at Canaccord Adams, still believes that troubled Oilexco (73cents) is worth looking at, even though its share price has been in afreefall. The Globe's David Berman writes Mr. Kozak has a "speculativebuy" recommendation on it.The stock market, though, is flashing red. The stock hit a high of$19.50 at the end of June. It is down 96 per cent since then.This is largely due to the decline in the price of oil. Morespecifically, Oilexco is suffering from financial issues, which hasforced it to take a $47.5-million bridge loan. Mr. Kozak believes theBritish banking syndicate behind the bridge loan will find a way tokeep the company solvent, and he also believes the stock is worthconsiderably more than 73 cents."However, the market is telling us that ... there is a possibility thatthis company may have to seek CCAA protection, reducing shareholders'equity value to zero," he said in a note. "We revert to the mean of themarket on this and also put the chance of this occurring at 50 percent."As a result, he has slashed his 12-month price estimate on the stock to$1.80 (Canadian), down from a forecast of $5.