Post by
Valueinvestor9 on Aug 26, 2015 11:37am
Adjacent Companies not Interested
Dear Shareholders and Potential Investors
Some promoters on this bulletin board have been attempting to sell the concept of Paramount, Seventh Generation or possibly Shell would come in a rescue this company. Hmmm not likely.
The currency each company will use is its shares, and when a company’s shares are down significantly they typically do not want to introduce further dilution to the existing shareholders. I give an example of Encana going out to acquire major US assets and the result has been large scale dilution and oh by the way, since Sept 9, 2014 (close was $25.50) and today, the stock is trading at $8.16. That is a serious wipe out for a junior but for Encana, one of Canada’s premier companies, that is unbelievable. Paramount is trading at a little over $11.00 today. I am a shareholder, and continue to believe in this management team. I continue to hold but am not adding to my position. The stock is down significantly and in no way do I believe that they would consider acquiring further assets like Kicking Horse. I know some of the directors, and if they were to look at this type of asset, it would run contrary to their quality assets and give no basis for diluting shareholders. They are not paying cash that is for sure. Any acquisition could potentially breach their debt covenants.
Seventh Generation is trading at $11.91. That trading price is substantially down from the $18.00 financing. Pat, has continued to say that they have plenty of inventory and no need to acquire outside assets. I would think none of their shareholders would appreciate a dilution event at this stock price.
Shell, what are they up to? Well this what I can tell the audience. A few new assets in the Montney may be looking to come available. Let me put it this way. Kicking Horse may be shopping itself, not sure but they must be. But they have competition!!!!
Do not try to catch a falling knife. I stand on my previous analysis, and that this company will struggle in this environment of $40 oil. Oh OIl is below $40.00
Call your broker/adviser.