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

RE:RE:RE:Conv Debt Balance Sheet Calculation Finalized

[Kherson]

BlueCollar51 wrote:

Calgaryrider wrote: Are we all convinced yet that a Debenture (an obligation) has the same impact as Debt with respect to a company's shareholders?

Either you owe $287M in money or you owe it in shares....same impact on the shareholder.

Now, $2.12; Precisely what the value of Canexus should be if you assume NATO is zero cash flow (which it is) and including the pile of debt this company has accumulated.

What NATO has effectively done is wipe $500M+ off the valuation of Canexus.  That's what happens when one sinks money into a wishing well.  Is there potential value in the asset?  Sure, but it's completely speculative in that if customers wanted to use its services, they already would be.  That story you've heard about constraints to getting products from the Western Canadian products to market just simply isn't true.  It's a matter of cost.  And NATO just simply can't offer a better cost to it's customer and at the same time achieve a positive cash flow.....OR THEY WOULD BE.

Also, if someone is willing to pay me as a basher, please PM me.  I'd love to get paid for this.

Buy tomorrow.(literally)

 

The debate re the Converts was if they were considered “Debt” in the calculations for the Credit Facility Covenants which they are NOT!
 
If you have a look at Note 10 on the Q3 report you will see that NATO is classified as an “Asset under construction”. Its value is transferred gradually to the balance sheet as “Plant and equipment” as it is completed.
 
During the Whistler Presentation Doug Wonnacott was asked about the contracting and potential sale of NATO. His answer was that there were two types of potential purchasers, Producers who would want the capacity for themselves and Midstream Shippers that would like the capacity to be already contracted. To keep their options open a balance had to be found which was why they hadn’t been aggressively contracting the capacity. He also said that NATO was currently just barley cash flow positive. Is this an “accident” or part of the sale “strategy”?


Please correct me if I am wrong. I believe that it was said on the Whistler presentation that a ruling re the ownership of the MEG connection was expected soon. To date I am not aware of a ruling being announced. I am not up to speed on the details of the issue and potential ramifications. I have been wondering if the ruling will be required before a sale or partnership can be finalized.
 
Personally I expect the Q4 operational results to be as good as if not better than the Q2 results and NATO will be “marginally” cash positive.
 
A dividend reduction in the range of 25-50 % would not surprise me.
 
We will know in a few hours…
 
As Always; Do Your Own Due Diligence; It’s Your Money !!

Posted March 12, 2015...