Lightstream Resources Ltd. LSTMF

RE:RE:RE:RE:RE:Number 1 short on market call

[boarderex86]

My concern is the covenant on total debt to trailing 12 months EBITDA (4:1 max). Most analysts think they will breach by the end of 2015 (based on some assumption of relatively flat oil) but you are correct that the LOC won't be reviewed until June 2016 but a breach would mean that they only have 2 quarters to improve this ratio which essentially means WTI must recover by the end of 2015 so that earnings are healthy in Q1/2 2016 (or Bakken sale needs to materialize). Note that I haven't done any analysis to confirm or deny the expectation of a 2015 breach. I believe some expenses items are also excluded from EBITDA ration but I don't think I have ever seen it disclosed what those items are.