Opinions
Patrick Kim
Keystone North America Inc.
KNA-T
BUY
Feb 22, 2007
Funeral services in the US. Technically not an income trust, but an Income Participation Security. Doesn't feel it is subject to the new income trust rules. Non-cyclical. A great long-term business. Good yield of about 12%.
$8.450
Stock price when the opinion was issued
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HOLD
Operates funeral homes. Last year was particularly slow. Generally should be a stable business. US$ income that has been converted into Cdn cash flow, which has been a problem. Recently cut their distributions and are doing a rights issue and lowering their debt, which is positive but a bit dilutive. Fairly valued.
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COMMENT
Wasn't actually structured as an income trust but as an Income Depository Security that consisted of a common share and some debt paper clipped together. They are proposing to replace debt with more equity. Rights were issued to unitholders. This allows debt to be replaced with common shares. He feels it makes sense to exercise the Rights.
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