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Big Banc Split Corp T.BNK

Alternate Symbol(s):  T.BNK.PR.A

The investment objectives for the Preferred Shares are to provide their holders with fixed cumulative preferential monthly cash distributions in the amount of $0.05 per Preferred Share ($0.60 per annum or 6.0% per annum on the issue price of $10.00 per Preferred Share) until November 30, 2023 (the Maturity Date) and to return the original issue price of $10.00 to holders on the Maturity Date. The Company will invest on an approximately equally-weighted basis in Portfolio Shares of the following publicly traded Canadian banks: Bank of Montreal; Canadian Imperial Bank of Commerce; National Bank of Canada; Royal Bank of Canada; The Bank of Nova Scotia; and The Toronto-Dominion Bank. The Portfolio will generally be rebalanced on a quarterly basis, starting on September 30, 2020, so that as soon as practicable after each calendar quarter the Portfolio Shares will be held on an approximately equal weight basis.


TSX:BNK - Post by User

Bullboard Posts
Post by rehsifylfon Jun 13, 2011 2:10pm
289 Views
Post# 18708242

If you're thinking this is a good deal

If you're thinking this is a good dealat $7.00 - and I imagine the only thing stopping anyone from buying BNK at $7 is that they think they may be able to get it cheaper - imagine what potential buyers are thinking?

At this point, I doubt that a buyer will wait for the thermal results before they make an offer.  At $7 it is quite possible that an offer of $9.5 would be accepted by shareholders.  Surely worth much more, but not according to this market.

At $9.5 - the price would be just over $2.5B assuming fully diluted (and likely all options would vest in the event of an offer).  What would they get for $2.5B.

Current production of 15K bpd and about 360Mof 2P - current netbacks of about $50 (that will probably range between $40-55 over the next 2 years).  About $100M in cash, and throwing off about $750K of netback per day.  Growing production monthly with a direct line of sight to 20K at YE, and 40K within 2 years.  Virtually no debt, but access to $134m if they need it.  Reserves growing modestly for now.

Risk - the current view that the world economy is screwed.  But then, if true, any investment is pretty much screwed (except shorting or puts - but that doesn't help an operating company).  So losing money of a BNK acquisition would be the least of their worries.

Weight that against the risk that the thermal pilot immediately doubles reserves, production goes to 20K per day, and they have another $40M in cash.  Thats what they would be facing if they try to buy at YE.  I doubt they would get it for less than $12 per share or $3.3B.  A hefty premium for waiting until commodities stabilize, and the thermal pilot is successful.

I expect we'll see an offer this month or next unless the share price gets back to above $8 before then. - then the premium for waiting is not as high, and they may wait.
Bullboard Posts