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

RE:NATO Sale is a positive - we'll see what the market says

[BlueCollar51]

ocean112 wrote:

Had they held NATO to end of 2015 - the would have drained cashflow and were at risk of hitting thier debt convenant - so yes - they lose significant value for the asset (congrats to Cenovus for picking it up on the cheap) - but they are now able to pay down debt and refoucs with very stable assets. 
 

According to CIBC - stub values - sale of NATO at $75M with say $250M for Chlor Alk = approx. $2.30 share price.

I'm guessing we should see a pop tomorrow since market was valuing NATO at $50M...the extra $25M helps.

 

I am very disappointed with the price that Canexus has sold NATO for.
 
From the beginning it has been clear that Doug Wonnacott had no interest in making NATO a success and his priority was to get rid of it. The result is that he has given it away.
 
It is a very good acquisition for Cenovus (a Gift). They understand the future potential of NATO and it will serve them very well. This is from their NR.;
 
"By purchasing this facility at an attractive price, we're taking greater control over a larger part of the value chain for our product, which we believe will result in improved margins and higher returns for our shareholders," said Bob Pease, Cenovus Executive Vice-President, Markets, Products & Transportation. "Ownership gives us additional flexibility to get our growing crude oil production to market and allows us to reduce the risk to Cenovus due to pipeline congestion. It also increases our ability to access niche markets not served by pipeline."
 
"We believe a key benefit of acquiring this facility is the ability it provides to quickly and economically expand rail car loading capacity in response to changing market conditions," said Pease. "We expect rail will be an important component of our transportation strategy for years to come. As the owner of the facility, we reduce our risk of having to compete for expensive rail terminal capacity during periods of pipeline congestion or potentially having production volumes stranded."
 
A good day for Cenovus; A bad day for Canexus!
 
Unfortunately $75m won’t put much of a dent in Canexus’s debt. We will have to wait and see if they can get a decent price for N. Vancouver or if they are going to give that away also.
 
As Always; Do Your Own Due Diligence; It’s Your Money !!