Bonavista moves to a sell

Article Excerpt

BONAVISTA ENERGY, $0.15, is now a sell. The company (Toronto symbol BNP; Shares outstanding: 265.2 million; Market cap: $38.6 million; TSINetwork Rating: Speculative; No dividends paid; www.bonavistaenergy.com) has total debt of $844.0 million, which dwarfs its depressed market cap of $37.5 million. But not only that, Bonavista is now in breach of its debt covenants. These are restrictions that the company’s lenders have put in place that let them impose limits on Bonavista if its debt grows too large relative to certain financial measures. Given the uncertain outlook for oil and gas prices, it will likely mean that even if the company is able to restructure its debt and survive, its debtholders will likely end up owning the company and its assets. That will very likely mean that there will be little, if anything, left over for Bonavista’s common shareholders. shareholders…

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