RE:RE:RE:RE:FYIocean112 wrote: didn`t realize Hawk posted a comment (he`s on my delete list - just another alias for Kherson). What Olin would be buying is not just another chlor alkali plant - but a strategically located facility with a 45%-50% market share in western Canada positioned to recapture oil growth in the coming 10 years as oil eventually stabilizes.
Doug doesn't seem to be budging - he's protecting shareholder value by telling buyers we are not dumping our assets at fire sale prices - after the Q4 announcement - he's prepared to play the long game (and they are at very low risk of breaking debt covenants if they do). Here is a worst case scenario.
Assuming NATO loses $15,000,000 in 2015 (even though most are suggesting oil prices to pick up in later half of 2015) - lets go with this assumption. Let's discount HCL to 21.5M (to account for 60% loss in HCL to oil and gas sector) - since O&G represents only 20% of Chlor alkalai business. Here is the math.
NaCL = $60M
Chlor Products = $21.5M
Brazil = $25M
NATO = -$15M
2015 EBITDA = $91.5M
Dividends = $7.4M
Net = $84.1M
Series III Debt Repayment end of 2015 = $59.58M
Capital Projects for 2015 = $65M
Cash Shortfall = -$40.5M
Interest Costs = $33.3M
Total 2015 Cash Shortfall = -$73.8M
Current Senior Debt Balance = $336.5M
Borrow 2015 Cash Shortfall = $410.3M
Senior Debt/EBITDA = 4.48
Borrowing Room = $1.3M
Conclusion = If you feel NATO by year end will be losing more than $15M - run away and never look back. If you feel oil prices will recover in latter half of 2015 and can break even - then Doug has time to play out the negotiation game to fetch a higher price for either chlor alkalai and NATO.
Using the same math above - if Chlor Alkali sells for $250M, and NATO for $250M = ($500M total) - at 8x EBITDA = price target is $3.20 (almost 100% return from current prices).
As Blue always says - DO YOUR OWN DUE DILIGENCE and don't count on my analysis.
ocean; I doubt that HAWK and Kherson are the same person. HAWK is clearly negatively biased but he does appear to be rational and attempts to back his opinion up with something resembling “financial analysis” which can be debated. Kherson on the other hand does what he does and I will leave it at that.
Different opinions make a market. Unfortunately all too often “different opinions” on Stockhouse boards deteriorate into “personal attacks” which isn’t very productive.
Although I have learned to “never say never” I tend to agree with HAWK that it’s unlikely that Olin will acquire the N. Van facility at this time. The transaction with DOW is complicated and transformational for Olin. The “New Olin” is projected to have a $1b EBITDA. The N. Van facility would be a nice “tuck in” acquisition for them but unless they could get it for a “fire sale” price they probably have more than enough to deal with for the foreseeable future.
I do agree that IF
(at this point it’s a BIG IF) Canexus can realise $500m from the sale of N. Van and NATO
(which I believe will ultimately become a cash cow) before the year is out it will be an entirely different company.
Actually I think that $250m for NATO is low. I am assuming that Canexus could sell the Bruderheim assets “lock, stock and barrel”. Which is 480 acres of prime industrial property with access to several pipelines, both CN and CP (as they say in real-estate “Location, Location”) c/w 1.6m barrels of salt cavern storage (more possible) and last but not least the NATO infrastructure that would cost a minimum of $200m (probably more) to build from scratch with lots of room left for expansion / diversification.
They would be left with a “World Class” Chemical Business and instead of having a maxed out Credit Facility they would have some cash. The only remaining debt would be abt. $252m (face value) in Convertible Debentures.
I am basically an “Investor” I don’t trade a lot. That said I have “occasionally” been able to salvage a “Bad Investment” with some “Good Trades” or just by being patient but it is Risky.
For now although I will probably miss some good trading opportunities I am going to be patient. I may at some point “roll up my sleeves” and attempt to make a good trade or two. If at some point I decide to “book a loss” I have more than enough “realised gains” (I don’t get them all wrong) available to apply it to.
As Always; Do Your Own Due Diligence; It’s Your Money !! PS; I think that the rest of my weekend will be better spent devoted to relaxing and drinking a Beer or three.