Cormark research"Increasing Target To C$0.30 Due To Increased Cash Bid; Maintaining Market Perform
Recommendation: Given the amount of risk surrounding High River’s ability to repay its debt obligations,
we believe the offer is reasonable relative to our revised NAVPS estimate of $0.39. Our NAVPS estimate
has increased slightly as we have incorporated a higher price (C$0.30/share) at which they could
potentially raise funds to pay off their short term obligations. We continue to believe that if the bid is not
accepted by minority shareholders, Severstal can easily gain an increased interest through the open
market and subsequent financings, and in our view, could justify further “bridge” financings to repay the
short-term debt obligations that will continue to come due over the next 12 months. As such, we are
increasing our target to C$0.30, in line with the increased bid, and maintaining our Market Perform
recommendation."
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