blackdog wrote: From this morning's edition:
Bonterra Energy Corp.'s (
BNE-T) newly secured liquidity will allow for growth through 2021, said Raymond James analyst Jeremy McCrea, prompting him to raise his rating to “market perform” from “underperform.”
On Monday, the Calgary-based company confirmed lending commitments of $45-million from the Business Development Bank of Canada and $38.4-million from Export Development Canada. It also formalized amendments to its senior credit facility to extend the borrowing base redetermination date to June 30, 2021 (from April 28, 2021) and to extend the revolving maturity date to Dec. 31, 2021 (from April 28, 2021).
“Bonterra had above-average leverage coming into the pricing downturn and unfortunately, given BNE’s size, lending facility constraints and low liquidity, the stock sold off more meaningfully than peers,” said Mr. McCrea. "In response, BNE suspended its dividend and mostly all investment amid a combination of these events. Six months later, Bonterra has now finalized lending agreements with the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) (which were initially announced on Nov. 2).
“Although some investors akin this to ‘
borrow from Peter to pay Paul’, the difference is ‘Peter’ is allowing spending once again. There are two ways to fix a balance sheet issue: 1) slowly chip away; and 2) grow profitability into the debt. We’re encouraged to see Bonterra now take this second approach as this likely gives equity holders much more potential value than what they were likely facing before. With 30-per-cent growth now expected into 2021 (while spending within FFO), D/EBITDA now down to 3.8 times 2021 (from 4.4 times previously), and wells that look to be more profitable, we are moving to Market Perform."
Mr. McCrea raised his target for Bonterra shares to $1.75 from $1. The average is $1.54.