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

RE:RE:RE:RE:FYI

[Kherson]

ocean112 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. 





 

$250 million for Blunderheim?
Too funny...
Kherson