Dale,
I too share your question, namely, why hasn't the stock moved upward in light of what appears to be improvements in Repap's core market; sale of Ancell technology and removal of further debt obligations, and of course, a "sold out position" on the backlog front?
I did see major volume last week at over 1.4 million shares traded, but pricing actually fell to 1/8 at one point, but it reaffirmed its trading range of 5/32 and 3/16.
Let's look at your options: A buyout or merger - I do believe this is in the cards, but not quite yet. I believe whom ever is going to do a deal is waiting for the debt levels to go down to a "manageable " level, but as this happens, the value of Repap will start to increase. Ultimately, if this card is played, and long term I have no doubt that it will, it will start to heat up when debt is sub 500 million C$, or if we start to see a string of say 4 to 5 profitable quarters. In the meantime, I believe Repap will see an operating profit of close of 15 C$ for the fourth quarter, representing their first comeback quarter since 1995. Expect even higher profits for 1st quarter? I can see the coated market reducing discounts further, in effect, increasing the real price.
Second option: Bankruptcy - I don't' see it. Perhaps a few months ago just after Avenor failed bid. Example: Moody's recently confirmed Repap senior debt to B2 - not bad! Improved market conditions, better pricing, and yes - although they didn't actually come and say it - PROFITS will keep debt payments on schedule - this is quite a turnaround, in my view, for the stand alone NB mill.
These are major structural shifts in Repap's market, and I believe ultimate valuation and share price. I'm bullish on Repap.
Fundace |
