RE:RE:RE:RE:RE:RE:RE:news for natoIf covenants are broken - and they likely are AGAIN, or on the verge of being broken - the senior lenders (the banks) can call their loans immediately, as in, this afternoon. This would make CUS bankrupt. Remember, they already relaxed their older covenenants - either because they were being trashed or on the verge of it.
When it's the duty of the management to serve the shareholder, why have they let them get trashed? Ask youself this.
If they are shelling out $70M in dividends / year and $20M in interest / year and NATO is cash flow negative regardless of all this, that $100M EBITDA just got consumed.
Now if the options to sell NATO are all below constructed value, does CUS really have any viable options to manage their debt?
I do agree that management has had the option to cut dividends for more than a year, but, ask youself why that hasn't happened.
There is a reason this stock has been getting beat down like a cancerous dog.
It's because others can do math.
I'm not saying Canexus assets are worth nothing, but with the combination of debt, escalating operational issues, tighter capital markets, decreased NATO asset value and a management team that clearly has no regard for what the market wants, this situtation could (and has been) spiralling out of control.
Management has backed itself into a corner where all the work and capital they've expended in the last three years of business has actually gone towards lowering the combined value of their assets and the share price. Good management just simply doesn't do this. And remember this happened at $100 Oil!
3 years! The market has no trust in them, and I'd be surprised if NATO suitors do at their core either.
Do as you wish, everyone. I'm just saying, be careful.
I hope they get a $500M offer and at least break-even on this, but I doubt they will.
I've been waiting to jump in, but see no real sign/indication that now is the right time.