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

RE:RE:Canexus Guidance for 2015

[Kherson]

BlueCollar51 wrote:
So, based on Ocean112's e-mail from yesterday (Ocean112 appears to be the unofficial spokesperson for Canexus, definitely an insider), Canexus is planning the following for 2015: 1. 2015E EBITDA of $91.5 million. Cash flow for the HCl business will decrease 20% to $21.5 million (that will help the sale of N Van). 2. NATO will have negative cash flow of $15 million in 2015 (who wouldn't pay $250 million for that business?). 3. Canexus has a $65 million capital program for 2015 which will be fully debt financed. 4. Canexus will end 2015 with $410 million in debt (not including the January dividend payment of $17 million). 5. Canexus will take its bank debt up to 4.5 times EBITDA, which will be at the limit of its covenants. What do they say about being in a hole? The first thing to do is to stop digging. Damn the torpedoes! RH
 
HAWK; I don’t understand why anybody that read the entire post with something resembling an “open mind” would think that this “Alleged Guidance” came from Canexus. To my untrained eye it looks like his personal assessment of the “Worst Case Scenario”.

DIFFERENT OPINIONS MAKE A MARKET

If you aren’t willing to show a bit of respect for the opinions of others why would you expect anybody to show you any respect? Or are you just another “Basher / Pumper” poster that quotes people out of context and makes accusations?

I don’t know anything about an e-mail from ocean112 but yesterday he did post this.

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.

Read more at https://www.stockhouse.com/companies/bullboard/t.cus/canexus-corporation#Cm450Wxx4Ibxyqxo.99