GREY:NEVDQ - Post by User
Post by
zero2millionon Feb 11, 2016 10:03am
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Post# 24547392
Scotia Bank analysis - Feb. 11th
Scotia Bank analysis - Feb. 11th NCU has announced a fully marketed best efforts financing for up to $15M (~C$22.7M). The issue price is to be determined in the context of the market. The deal announced is largely to satisfy the amended senior secured loan agreement with Red Kite announced last month.
We previously noted here that under the amended agreement with Red Kite, NCU had until April 15, 2016, to complete a financing amounting to a minimum of $15M. Red Kite has agreed, subject to certain conditions, to subscribe up to $2M of the offering.
We had previously factored this financing into our modeling, however are lowering the assumed issue price. We now assume an issue price of $0.50/sh, in line with current levels.
We believe NCU will ultimately be able to secure the necessary funds to satisfy the Red Kite conditions. In the context of the current equity market, we believe the question remains at what price. We think there are several other avenues for NCU to raise additional capital by the April 15th deadline, should they be required.
We rate NCU SO with a fully diluted, fully-financed target price of C$2.00.