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

RE:RE:TD report

[Kherson]

Kherson wrote:

matmckenzie wrote:
Excluding the one-time items, results in the quarter exceeded our forecast, with material q/q improvement seen at the North American chlor-alkali business, despite an ongoing compressor issue limiting production capacity. The sodium chlorate and Brazil businesses remain relatively stable. TD Investment Conclusion We view the acquisition of Canexus by Superior Plus as a positive for Canexus shareholders, who are able to obtain a significant premium to the shares' trading range prior to the deal announcement and to our view of fair value of the company, Given our view that the transaction will close in the coming months

The problem belies in the fact on whether Canexus can remain solvent before the merger is completed! If the banking syndicate does not ease the financial covenants by March 31st, then Canexus must get permission from Superior to seek other forms of financing.
Kherson

What everyone is missing here is that Canexus had only $34 million of available liquidity as of December 31st. Exactly how much of that will be left by March 31st is anyone's guess, but with the reduced debt to EBITDA ratio coming into effect on March 31st, the available liquidity will be  reduced a further $25 million or so. 
Finally, lets not forget that $7.5 million debt repayment also due on March 31st!
Canexus has clearly signalled that they may no longer be able to continue as a going concern...
Kherson