TSX:CUS.DB.D - Post by User
Comment by
leo101on Mar 28, 2015 12:33pm
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Post# 23572710
RE:RE:RE:RE:FYI
RE:RE:RE:RE:FYIocean112 wrote: didn`t realize Hawk posted a comment (he`s on my delete list - just another alias for Kherson). What Olin would be buying is not just another chlor alkali plant - but a strategically located facility with a 45%-50% market share in western Canada positioned to recapture oil growth in the coming 10 years as oil eventually stabilizes.
Doug doesn't seem to be budging - he's protecting shareholder value by telling buyers we are not dumping our assets at fire sale prices - after the Q4 announcement - he's prepared to play the long game (and they are at very low risk of breaking debt covenants if they do). Here is a worst case scenario.
Assuming NATO loses $15,000,000 in 2015 (even though most are suggesting oil prices to pick up in later half of 2015) - lets go with this assumption. Let's discount HCL to 21.5M (to account for 60% loss in HCL to oil and gas sector) - since O&G represents only 20% of Chlor alkalai business. Here is the math.
NaCL = $60M
Chlor Products = $21.5M
Brazil = $25M
NATO = -$15M
2015 EBITDA = $91.5M
Dividends = $7.4M
Net = $84.1M
Series III Debt Repayment end of 2015 = $59.58M
Capital Projects for 2015 = $65M
Cash Shortfall = -$40.5M
Interest Costs = $33.3M
Total 2015 Cash Shortfall = -$73.8M
Current Senior Debt Balance = $336.5M
Borrow 2015 Cash Shortfall = $410.3M
Senior Debt/EBITDA = 4.48
Borrowing Room = $1.3M
Conclusion = If you feel NATO by year end will be losing more than $15M - run away and never look back. If you feel oil prices will recover in latter half of 2015 and can break even - then Doug has time to play out the negotiation game to fetch a higher price for either chlor alkalai and NATO.
Using the same math above - if Chlor Alkali sells for $250M, and NATO for $250M = ($500M total) - at 8x EBITDA = price target is $3.20 (almost 100% return from current prices).
As Blue always says - DO YOUR OWN DUE DILIGENCE and don't count on my analysis.
how can EBITDA - Dividends = NET? your worst case scenario looks like a best case scenario to me. in addition to omitting a myriad of expenses you're assuming competent execution.