Opinions
Brian Huen
Sherritt International Corp.
S-T
DON'T BUY
Sep 16, 2013
$3.900
Stock price when the opinion was issued
integrated mines
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DON'T BUY
This is a zero, although not priced there yet. That is where it is going. It has been a lousy company for a long time. Madagascar will prove to be their undoing. They defaulted on their debt in February. Their debt is currently worth 54 cents on the dollar so the stock is worth zero.
integrated mines
RISKY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
It is certainly not beyond possibility. Bloomberg default ratio is 7.36%, which is very high for that indicator. Cash flow was negative in the last quarter, yet 12-month interest expenses were $36.1M net. With its small size and Cuban and other issues, we are not sure it could raise a lot of money with a dilutive equity issue. Most debt matures in 2026. Certainly any investment here needs to be considered extremely risky.
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integrated mines
He has been quite negative, given the exposure to nickel. Madagascar still has problems getting to the ramp up level. Nickel prices will be challenged because of the supply prices. There are lots of talks of breaking up the company. He would not go in until he is more confident it will happen.