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

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Seeking Alpha Article - Canexus

[Roxy27]

Well, now you are personalizing and showing evident bias since you've qualified that you will only accept opinions that are "plausible" and that only you are the true judge as to what is plausible. 

You've done nothing to support a sale of $280 million, support $10 million in efficiences, to support $10 million in annual working capital advantages. These kind of perfect scenario forecasts are what burned investors in the first place. And why is $1.00 per share so important to you? And what does the historical trading range have anything to do with what its worth now when the entire capital structure have changed ; they've sold a major business unit and diluted equity.


Superior trades at a 9x multiple to TTM EBITDA. ~8.5x to forward EBITDA.
This is a company that is deleveraging, increasing dividends and has access to low cost capital for acquisitions. Companies get a that kind of multiple for growth.

And somehow Canexus, in your opinion deserves the same multiple. Or rather, not even your opinion, your cut and paste of someone else's opinion. 

Superior was trading at a 7x multiple when it was in the doghouse, as low as 6x at it's 2011/12 low's. It was also nearly 3x the size of Canexus at that time. 

I've already pointed out that Superior doubled it's Chlorakali capacity by spending $46 million on its existing facilities. The Canexus facility is 1/3 the size.
The Canexus facility is a tier 2 facility and would need capital investment to bring it to a similar level of efficiency. The good news is that Canexus already converted from mercury cell production to membrane cell production at a substantial investment.
These factors are why I see a sale more likely in the range of $200 million, somewhere in the range of 9x multiple for actual EBITDA and 7x for Proforma.

This is mostly a moot point though, since these are all "guesses" of possible outcomes, and the range of possible outcomes results in a large range of valuation possibilities.
Right now psychology is a big factor in how it trades. Most people that currently hold the shares have a mental view that "now the stock can go back to what is was before", without really understanding what the implications of increasing leverage nearly 50% along with 50% equity dilution. 

The conviction that a mgm't team that permanently wiped out $100's of millions of shareholder value should get the benefit of the doubt is also questionable. 
Superior traded in the doldrums for a year until new executive mgm't took over 

There is some relief that the likehood of restructuring is off the table, that must feel like paradise after the last year.

Good luck trading