(NKO : TSX : $1.34), Net Change: -1.28, % Change: -48.85%, Volume: 7,510,858
Ability to continue as a going concern?
Following Niko‟s Q2/F14 results, and its announcement of a potential $340 million high-yield debt facility, Canaccord Genuity Oil & Gas Analyst Christopher Brown has downgraded his rating on NKO shares.
In Brown‟s view, if the company secures the proposed debt facility, the majority of its operating cash will be directed toward high interest debt payments. Moreover, the debt would be on a first priority basis, secured by substantially all of NKO‟s assets.
As such, if the company is unable to secure additional funds through asset sales, Brown believes it is likely that NKO‟s assets will revert to the new debt holder. His sentiment is echoed by NKO‟s financial auditor, which states it has significant doubts about the company‟s ability to continue as a going concern.
Also announced, NKO has signed a letter of intent with Diamond Offshore (DO) relating to a settlement of the company‟s payment commitments and obligations relating to the Ocean Lexington and Ocean Monarch rigs.