Scotia:"Our take. While we held the view that PCE's asset base fits well into a
dividend model, its high debt level, in our opinion, was a hurdle.
The proposed transaction does improve the debt outlook (D/CF at 2.5x versus
PCE stand alone at 3.0x)
but at a high cost in our opinion.
Before this proposal, PCE was
looking at assets sales to de-lever and gear its focus on its emerging Pekisko play at Matziwin,
where early results have been positive. Given PCE is now in play, we recommend investors
hold the stock as terms of the exchange ratio may change to reflect better terms or another
incoming bidder may surface.
We maintain our 2-SP rating and one-year target price of $5.50/share. "