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Catalyst Paper Stock Tumbles |
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By ROMA LUCIW
Tuesday, January 31, 2006 Posted at 4:54 PM EST
Globe and Mail Update
Catalyst Paper Corp. plunged Tuesday after Norske Skogindustrier ASA said it
would sell its 29.4-per-cent stake, severing the last of its ties with the
Vancouver-based forest products company.
Catalyst Paper stock sank 23 cents or 6.71 per cent to $3.20 on the Toronto
Stock Exchange. More than 1.5 million shares changed hands Tuesday, compared
with an average daily volume of 360,286.
Norwegian paper maker Norske Skogindustrier told investors late Monday that
it would sell its entire stake in Catalyst Paper in a secondary stock
offering worth $192-million. Norske Skog is selling its 63 million Catalyst
shares for $3.05 each in a bought deal with UBS Securities Canada Inc.
The Canadian company will receive no proceeds from the offering, after which
Oslo-based Norske Skog will have no interest in Catalyst. The Norwegian
company has cut its stake in Catalyst, a company formerly known as
NorskeCanada, from more than 50 per cent in 2000.
Daryl Swetlishoff, an analyst with Raymond James in Vancouver, said the
decision was “somewhat unexpected given that the offering prices Norske
Skog's investment significantly below (48 per cent) its cost base of
approximately $5.85 per share.” Given that the $3.05 sale price is 11 per
cent below Monday's closing stock price for Catalyst Paper, he forecasts
that the stock would suffer near-term pressure.
However, Mr. Swetlishoff maintained his “market perform” rating and his
$3.50 stock price target, saying that the Norwegian company had been
distancing itself in recent years from Catalyst Paper and needs to manage
its debt after acquiring 50 per cent of PanAsia Paper from
Abitibi-Consolidated Inc. last year.
“We expect Norske Skog's offering to remove a persistent negative overhang
on Catalyst's shares longer term,” he said, calling the $3.05 a share offer
price “an attractive entry point.” |
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