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

RE:RE:RE:RE:RE:RE:RE:RE:RE:Seeking Alpha Article - Canexus

[ocean112]

Roxy27 wrote: Ocean112,
Let's try not to personalize the discussion. If the intent is to educate and learn then take what you find of value and let the rest slide. 

The outcome of the chloralki business (sale at $280 million, $150 million or no sale) is MATERIAL to the potential value of Canexus. Other than the obvious immediate impact to remaining debt, it will also dictate there cost of capital going forward (ability to access equity and debt as necessary).

I also think that the annual efficiences gain of $10 million and the annual $10 million working capital benefit will also have a material impact on share price conclusion.

Most analyst reports show an upside/downside range which, for me, is a good way to guage real value.
For Canexus, because the equity is such a small part of the capital structure, the spread would be in the range of $1.00 - $3.00 over 2 years.

To my assessment its a $1-$2 value range, therefore not appealing for the equity at these levels. At $1.25 I'd revisit depending on what occured to move it there. 

Good luck

Roxy - not trying to personalize - just made an observation.  But since you brought it up - i'm looking for an intelligent counter argument to suggest why the stock may move towards $1.00 a share.  My range is $1.37 (the 52 week low) to $3.00.   After the sale of NATO and (or) Chlor Alkali - I see more upside than downside from these levels.  Can you articulate a plausible rationale how you think this may go to $1.00?  My observation with Calgary's analysis - he dodged the question and didn't provide an answer.  I don't beleive valuing Brandon/Brazil  at 6x-7x EBITDA is plausible (unless you can defend it).  Nor do I think Doug has a bad day and gives away Chlor Alkali for next to nothing because he feels like it.  I'm really looking for a well articulated bear case to get a full picture - no one has stepped up.  Perhaps it's you?