Nova shares surge on financing speculation
Wed Feb 4, 2009 3:15pm EST
CALGARY, Alberta, Feb 4 (Reuters) - Nova Chemicals Corp (NCX.TO) shares surged more than 39 percent on Wednesday on speculation the raw plastics maker has secured $100 million in financing to help it meet its financial obligations.
Nova jumped 54 Canadian cents to $1.92 on the Toronto Stock Exchange. Its New York-listed shares rose 47 cents to $1.57. Earlier, the stock shot up more than 75 percent.
The Globe and Mail newspaper said on its website that there was speculation the company may have struck a deal with an Alberta government-owned institution.
The report quoted market sources as saying the rescue package could be in the form of a bond issue that would be bought by pension plan manager Alberta Investment Management Corp. It said ATB Financial, the provincially owned bank, was also speculated to be providing a loan.
A Nova spokesman would not confirm a deal.
"We are aware of the story and I can tell you we haven't made any further financing announcements," Nova's Greg Wilkinson said. "Our statement continues to be that we continue to be confident in our ability to work with our lenders going forward."
Officials with AIMCo, ATB and Alberta Premier Ed Stelmach's office were not immediately available for comment.
The speculation also fueled gains in Nova's debt. Its 7.4 percent notes due this year have climbed 21 cents on the dollar to 74.5 cents, traders said. Meanwhile, Nova's 6.5 percent notes due 2012 have gained 10.5 cents on the dollar to 38 cents, according to KDP Investment Advisors.
Nova is a major employer in Alberta and it has extensive assets in the Western Canadian province, including a massive ethylene and polyethylene complex in the central Alberta town of Joffre.
Earlier this week, Nova's shares tumbled after three bond rating agencies downgraded the company's debt on renewed worries about its liquidity amid the petrochemical industry's sharp downturn.
The company has a series of debt maturities coming due over the next 18 months, starting with a $250 million bond repayment in April.
Standard & Poor's pointed out Nova has to raise $100 million by the end of this month and another $100 million by June 1.
The company has said it won relaxations on some its debt covenants that give it access to its credit lines in the first half of this year, but it continues to seek financing.
Last week, Nova reported a deep fourth-quarter loss, and a 36 percent drop in revenues, as demand for its plastic products weakened.
($1=$1.23 Canadian) (Reporting by Jeffrey Jones in Calgary and Tom Ryan in New York; editing by Rob Wilson)
