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

RE:RE:RE:Plains Midstream Canada - Placement

[Kherson]

ocean112 wrote:

well - NATO is definately worth more than the $0-$40M the market is attributing to the facility (depending on which valuation assumptions you use). Personally speaking - it's mind blowing how irrational the market is with this stock.  I've gobbled up a sizeable position just based on my valuation of the parts.

Yes - there are headwinds - but the market is implying I could buy NATO with a dime given the current share price.   To the right buyer - (like a plains or cenovus) - NATO is far more valuable in thier hands than what Canexus could do on thier own with it, and they could generate a great deal more cashflow than Canexus which is why I believe the market will do a 180 when the price is announced for NATO.   This is what a midstream could do with NATO with proper management:

at 10.5 trains - $50 M EBITDA
at 14 trains - $78M EBITDA
Add $10M - Salt Caverns/Storage - $88M EBITDA
Add $10 M - Manifest Full Capacity - $98M EBITDA
Add $2M Synergies - $100M EBITDA

At 5x EBITDA - you're already at $500M.

Perhaps the above numbers are aggressive - but most analysts value NATO at 8x to 10x EBITDA....time will tell but cost recovery at a minimum doesn't seem to be too far out of the question with 9-10 bidders, despite what the market feels. 

....long and short (and to your point) - NATO is irrationally undervalued. I was lucky to pick up a chunk at $2.50.  I'm optimisitc and holding long my position until after the announcment next month.

Very good points Ocean112, of what Blunderheim could be worth if under proper management, therefore maybe you should be buying Plains Midstream?
Right now Canexus is a distressed company and Blunderheim is a distressed asset as Doug clearly stated in his presentation at Whistler...
Kherson