Nova Chemicals pitched on bought deal financings
Andrew Willis, today at 2:03 PM EST
Investment bankers are lining up to pitch stock sales at Nova Chemicals, while the company continues to work on a renegotiated debt package with lenders.
With the clock ticking on debt refinancing - Nova must come up with $100-million by the end of the month - Canada's largest chemical company is being offered bought deals that would put $100-million or more into the company's coffers. There's a lineup of investment banks offering to sell equity, and a number of fund managers willing to commit capital to the potential turnaround.
To date, Nova executives are listening to the bankers, but asking dealers for more time to strike new terms on its loans, which would in turn boost the stock price and make an equity sale less dilutive for existing shareholders.
Executives at one fund manager being touted as a potential backer - the Alberta Investment Management Corp. or AIMCo- said Wednesday that they are not working with Nova on a refinancing.
The dean of Canadian analysts in the sector, Sam Kanes at Scotia Capital, published a note on Nova early Wednesday that modelled a $200-million (U.S.) issue at $1 a share, or $1.23-a-share Canadian. Nova shares are changing hands $2.46 on the Toronto Stock Exchange Wednesday.
Scotia Capital's work on Nova puts the odds of insolvency at 50 per cent, and Mr. Kanes said: “Speculators should wait for a Nova equity issue to see if it satisfies Nova's bankers.”
Mr. Kanes said that in its most recent earnings release, “Dow Chemicals' CEO said, 'we are planning for a global recession throughout 2009' and late 2008 demand levels are expected to persist for several quarters. This does not bode well for Nova.”
