Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.E

Alternate Symbol(s): CGIFF | T.CHE.UN | T.CHE.DB.G | T.CHE.DB.H

Chemicals Basic Materials

Chemtrade Logistics Income Fund is a Canada-based company that operates a diversified business providing industrial chemicals and services to customers in North America and around the world. The Company's segments include Sulphur and Water Chemicals (SWC), and Electrochemicals (EC). SWC segment markets, removes and/or produces merchant, Regen and sulphuric acid, sodium hydrosulphite, elemental sulphur, liquid sulphur dioxide, hydrogen sulphide, sodium bisulphite, and sulphides, and provides other processing services. This segment also manufactures and markets a variety of inorganic coagulants used in water treatment, including aluminum sulphate, and a number of specialty chemicals, including sodium nitrite. EC segment manufactures and markets sodium chlorate and chlor-alkali products including caustic soda, chlorine and HCl, largely for the pulp and paper, oil and gas and water treatment industries. These products are marketed primarily to North American and South American customers.

TSX:CHE.DB.E - Post by User

Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures

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Comment by Khersonon Apr 16, 2019 6:48pm

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Post# 29636201

RE:RE:RE:RE:RE:RE:RE:RE:RE:Capharnaum

borne2run wrote: Okay, I will connect the dots for you.

Massive increase in debt and number of shares.
But, cash flow barely budges.

Conclusion: The industry sucks and/or the company is a poor asset manager.

Assets increased?
The same ones they are writing down because the business isn't as profitable as in 2013 when they decided to overpay for General Chemical?
Using the company's own balance sheet, book value per share declined from $12.75 in 2015 to $10.44 in 2018.

It is highly likely that most of the acquired plants are capex pigs, requiring large expenditures to reach efficient operational status, let alone best of breed. Chemical plants require significant annual maintenance capex - there ain't no wiggle room between operating cash flows and distributions. Read the conference call - impression is that there is no shoratge of projects to absorb $80 - $90 million in annual capex.

Look at the earnings per year, when have they ever covered the distributions?
If the earnings don't cover the distributions, what happens?
Net debt increases annually.
What occurred every year since 2014?
Yup, net debt increased.

2018 - Net debt increased by $140 million and only $100 million was due to the legal provisions. So, $40 million was due to distributions exceeding the net cash generated by the business.

Chemtrade is NOT going bankrupt, but neither is it a bargain at $9 per share.
And the dividend needs to be cut significantly (i.e. by 50%) in order to reduce the debt.