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

Having trouble figuring out what would be a fair share price

[materialsgirl]

You're not alone if you struggle with answering this question

One big financial house is looking for a double over the next 12 to 18 months ($2.75) and of course it is easy to justify a price of $1 $2 $3 or $4.   You can supprt the conclusion easily by adding or subtracting a few hundred million dollars to the sale price of NATO.  Piece of cake really.

Nonetheless any assumed price can only be siurced from one place;  out of thin air.

Have pity on analysts

mat

[Calgaryrider]

Analysts have been chasing the price down since $5 or $6, so give them no more credit than anyone else.  In fact, as they've been continually wrong, give them even less credit. NATO is worth only what the free market says, and that value is too low for even Doug to get rid of this asset; the asset he openly and publically disparages at every opportunity.

[Adam999]

First off, I begin to question how much attention it's worth paying to analysts (I'm not saying to discredit them entirely) but many were recommending this as a buy back at $6.50, only thing that's changed is NATO costs came in at about double, debt has accumulated and now the dividend is greatly reduced. The other assets (core of the business) are more or less stable cash flow

[materialsgirl]

Adam; You always need to be careful in applying a blanket formula.  It can be useful as a start point only. For example excluding depreciation regarding a new apartment building is safe.  The building will last 100 years and by then the land will be worth 20 times the total cost of the original buliding.  But to exclude amortisation re a mine with an 8 year life would be a

[HAWK37]

Adam, well for starters, this isn't a government bond backed by taxpayers. You have to adjust for (considerable) risk. Use 6.5%, which is Canexus cost of debt (the convertibles pay 6.5%). Using that, according to your formula, the IV is $653 million and the value of the equity is zero. hmmm. DS