adri67 schreef op 6 februari 2015 22:22:
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Price target $0.00
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Niska Gas Storage (NYSE: NKA) is under heavy pressure Thursday (-9.3%) following a downgrade to Sell at Citi. Going further than a normal Sell rating, analyst Faisel Khan sees a potential credit event and sees the stock valued at "$0.00."
"While we believe NKA's gas storage assets will be valuable over the long-run, the business does not support the capital structure today and a credit event now seems likely," Khan. "We believe interested parties will look to restructure the debt and reduce the leverage of the business and potentially convert a portion of the debt to equity. A prepackaged bankruptcy may effectuate the change."
He added, "We believe the equity value of NKA will be determined by the restructuring of the business or a potential strategic transaction unless the business fundamentals improve materially. We now believe there is increased risk that the public equity will be diluted substantially in a restructuring. The covenants may be breached. Moody s and S&P recently downgraded the credit outlook for Niska s debt. In our view, it will be challenging to refinance the debt because the cash flow is not likely to support the financing costs. Over the next year, there are several possible outcomes with several resulting in $0 per share of equity value. As a result, we are changing our price target to $0."