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

Scotia Commentary

[ocean112]

Recent Update Text as of 3SEP14

. MEG refused to grant Canexus permission for the final pipeline tie-in.

 

. MEG Energy Corp. (MEG) refused to allow Canexus to complete the tie-in of the

Cold Lake (CL) pipeline system from Lamont Station into the MEG pipeline. This

connection is essential for the commissioning and start-up of Canexus'

oil-by-rail terminal because without it no oil will flow from the CL system to

the Bruderheim terminal. 

 

. Canexus believes MEG has no legal justification for its refusal and has taken

legal action against MEG. CUS sees itself as being on "very solid legal footing"

and expects to be "successful in completing the tie-in in the next coming weeks"
 

. Although there has been no confirmation by MEG, the statement of claim filed by

Canexus on September 2, 2014, states that MEG has "preferred its own interest

and effectively sought to render the NATO Terminal a private terminal for MEG's

exclusive use, or otherwise exploit the vulnerability of Canexus in an

unconscionable manner".

 

. We are not able at this time, to assess the financial impact on Canexus. Pending

a court decision or resolution of this conflict, we reiterate our SP rating and

$5.60 target but would expect CUS shares to be under pressure today.

 

[ocean112]

my take - MEG better have a pretty solid legal justification for refusing the tie in given all the investment and downstream impacts to other customers - given the previous posts - and what seems to be a contractual agreement - the onus is on them to show they have an out which by my read seems unlikely.....from a risk reward - I give this an 80/20 that it won't be a long court battle, and

[1short1]

I agree and hope this will be a short lived battle - it is one thing to screw us little investors but you can bet there are bigger fish than us out there (investors and companies) that will lose millions and they will be looking at MEG not just Canexus (hoping Canexus didn't royally screw it) . Just because of the pain to my brain I hope they (Canexus or anyone) hit MEG for damages