The Potential Future of Canexus Canexus is currently in bad shape. There is no point in rehashing why (that has been done repeatedly). It Is What It Is!
At this point the only thing worth doing is to attempt to “Predict the Future”.
We have been told that the NATO and N. Vancouver assets are for sale so we may as well work with that.
2016 EBITDA Estimates from the CIBC Update 27 March 2015 North American Sodium Chlorate
$63m North American Chloralkali $22m
Bruderheim Transloading $ 1m
Brazil
$25m Total
$111m ** The TD (March 16) 2016 Total EBITDA estimate is $119.4m with different breakdowns.
If we assume that both the NA Chloralkali and Bruderheim assets have been sold by late 2015 or early 2016 for $500m (doable in my opinion) the “New Canexus” could look like this;
2016 CIBC EBITDA Estimate North American Sodium Chlorate
$63m (TD $68.2m)
Brazil
$25m (TD $31.5m)
Total
$88m (TD $99.7m)
DEBT Credit Facility $0 (possibly cash on the balance sheet)
Convertible Debentures (face value) abt. $253m
TOTAL Debt/EBITDA (CIBC) 2.9 (a bit high but very manageable)
If the market valued the “New Canexus” at 8 x $88m EBITDA (CIBC) = $704m market cap.
The current Share count is abt. 186m. If we use 200m to allow for some dilution the implied Share Price is $3.52 using the CIBC EBITDA estimates. ** Using the TD EBITDA estimates would have given better results. (SP $3.98)
** The CIBC 12 month SP target is $2.75 based on 1 x their NAV estimate with no asset sales.
** The TD 12 month midpoint SP target is $2.00 with no asset sales.
Obviously the above scenario is based on Assumptions, Estimates, and Speculation. (SOP when attempting to predict the future)
There is absolutely no guaranty that it will come to pass.
That said in my “Opinion” it is “Possible”…..
Personally the way I see it as a seriously underwater CUS shareholder I have 3 options;
- Sell now and book a large loss. (not acceptable)
- Wait it out and probably have a smaller loss. (worse things can happen)
- Attempt to “Make Lemonade” from the CUS Lemon (HIGH RISK)
I don’t believe in “averaging down” for the sake of it but I have occasionally used option #3 in the past to “Salvage a Bad Investment” with varying degrees of success.
In my situation if I doubled my CUS position at the Friday close ($1.58) my ACB would be $2.97.
IF (the operative word) I actually do that and my “Speculative Scenario” pans out in a year or so I will have turned a potential major loss into a small win.
I am currently “contemplating” option #3. If I spend too much time “contemplating” and there is some positive news the SP could get away on me and my opportunity to “Snatch Victory From The Jaws Of Defeat” may slip through my fingers.
This DIY Investing stuff is tough, decisions, decisions, decisions…
Whatever decision I do make will be My Decision and I Will Own the Result!
As Always, Do Your Own Due Diligence; It’s Your Money !! PS; “Constructive Criticism” will be appreciated, Bashing will be IGNORED