CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

From CIBC

[ocean112]

What's The Event Dow Chemical (DOW-NYSE) agreed to spin off its chlor-alkali and downstream derivatives businesses and merge them with Olin (OLNNYSE) in a tax-efficient Reverse Morris Trust transaction. The revenue of the newly-created company is expected to be $7 billion, with EBITDA of $1 billion. The transaction has a tax efficient consideration of $5 billion, and a taxable equivalent value of $8 billion to Dow and Dow shareholders.

Implications The transaction implies an EV/EBITDA multiple of 8x (on a tax efficient consideration) to 12.0x (on a taxable equivalent basis). Given Canexus' chlor-alkali 2014 EBITDA of $27 million, the OlinDow transaction multiple implies a North Vancouver value of $216 million to $329 million. North Vancouver Plant For Sale: Recall that Canexus has engaged a financial advisor to explore the potential sale of the North Vancouver chlor-alkali business. After the recent write-down, North Vancouver book value is $292 million and probably is a good indicator of an "ask" value. The sales of the North Vancouver plant and the NATO facility are independent of each other, and it is possible that both facilities can be sold