Stockwatch -Recap - Scotia Analyst Target Price 15 cents....Read below...Scotia Analyst target price is 15 cents....
Back in Alberta, gas producer Bellatrix Exploration Ltd. (BXE) lost 12.5 cents to 30.5 cents on 6.1 million shares. Having had a whole weekend to digest Bellatrix's recapitalization proposal, investors found that they did not like it any better than they did on Friday, when the recapitalization was announced and the stock promptly dropped to 43 cents from 53 cents. As noted in Friday's Energy Summary, the recapitalization involves exchanging near-term debt for shares or for longer-term debt. This will clear about one-quarter of the total debt and push out the next maturities until 2023, but it will also boost Bellatrix's share count to 490 million from 81 million, while leaving the company still highly indebted. The remaining debt will be nearly $330-million, of which a daunting $267-million will be due in 2023. For perspective, Bellatrix's total revenue in 2018 was just under $205-million. (That is revenue, not earnings. Bellatrix posted a net loss for 2018 of $146-million.)
The recapitalization did not impress analysts any more than it did investors. Scotia Capital analyst Cameron Bean gave his new research note the blunt title, "Die Another Day: Recapitalization Helps, but Debt Burden Remains High." He expects Bellatrix to roll back its shares at some point after the recapitalization. (Bellatrix has already rolled back its shares once, in the summer of 2017, at a ratio of 1 for 5. Adjusting for that rollback, the stock has had a harrowing fall to its current level of 30.5 cents from its 2014 peak of over $58.) To have any chance of winning back investors and coping with its debt, Bellatrix will need a "significant" improvement in commodity prices, concluded Mr. Bean. He has a "sector underperform" rating on the stock and a price target of 15 cents, just half of today's close of 30.5 cents.