Topic: How To Invest

Stock Pickers Digest Hotline – Friday, April 12, 2019

Article Excerpt

BELLATRIX EXPLORATION LTD., $0.30, symbol BXE on Toronto, produces natural gas (71% of output) and oil (29%) in Alberta, B.C. and Saskatchewan. The company is now undertaking a major recapitalization plan to deal with its big debt. The strategy will see Bellatrix’s total outstanding debt cut by $110 million (approximately 23%) and reduce annual cash interest payments by over $12 million. It will also address the company’s looming debt maturities, pushing back those due dates to 2023. The recapitalization buys Bellatrix time. However, its debtholders will get a large number of common shares as part of the transactions. That leaves its current shareholders with just 16.5% of the shares outstanding. Despite the reduction in debt and interest payments, the company will likely continue to report negative cash flow considering the capital spending it needs to maintain production at current levels. As well, the recapitalization will raise the number of shares outstanding from 81 million to 490 million. As a result, the company plans to consolidate…

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