CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:RE:RE:speculation

[phoenix_trader]

From Jan 12, 2015, Ocean 112 Assuming they make $100M EBITDA on chemicals alone (lets assume $0 for NATO even though with current contracts they have another $22-$30M in EBITDA for 2015 with unit train and manifest). Per an earlier post, debt covenants do not include covertables - so they have plenty of room on the covenant side. (LT Debt of $318M divided by EBITDA of $130 at about 2.44 versus room of 4.5). EBITDA would have to fall by $50M for Canexus to be at risk of breaching debt covenants. With lower oil, retail/consumer packaged goods, etcs should fare well (money saved at the pump will increase grocery purchases), which would drive demand for pulp and paper (packaging), which should bode well for Canexus for Sodium Chlorate. They'll take a small hit on HCL with oil customers, but even there the bulk of thier business is pulp and paper so any offset with lower oil demand will be more than offset with pulp and paper demand. My EBITDA estimate does not include another $5M related to lower $CDN/US exchange rate (per the last call, for every $.01 fall in the CDN dollar, they net about $1M EBITDA across all businesses). If Fed increases rates, we will see a net benefit on FX rates. Lastly, should they win the MEG dispute, throw in another $5M in $10M in lost revenue from the lost contract. Conservative EBITDA for 2015 - $120-130M - with Chemcials and NATO With FX and MEG win - $135-$145M Of course, this doesn't take into account NATO sale (assumes they keep NATO). At these price levels, the upside far exceeds any more downside (even though nervous investors may drive this lower). Every bank has valued this at low end $3.50 (TD - using extremly low EV/EBITDA multiples) to $5.25 (CIBC, Acumen, etc). Just need patience to let this NATO deal move through the process. Right now - it's getting near zero valuation which is just a ridiculously good opportunity in my books.