Refinancing

Refinancing now is a good long-term move. Especially for companies which have a good credit rating and can afford the penalties.

Unfortunately Connacher is not in the same basket like CPG is. Cll had only $19 million cash on hand at the end of 2010. The Q1/2011 losses and CAPEX will drain more cash eating in to the reserves from asset sells.

In addition they have to come up with $100 million to pay for the convertible. What if management will get the approval for Algar expansion and ask shareholders to pay $300 millions for it?

I would say CLL does not have strong position for refinancing a good deal. We may end up with more debt , a bit lower interest and more dilution.

Just as small reminder about what the CLL and Banks sign on to $600 million Senior Notes :

1. ....The Senior Notes are unconditionally guaranteed by... all company’s and its subsidiaries’ assets, with the exception of Connacher’s investment in Petrolifera

2.....The company may redeem some or all of the Senior Notes at their principal amount plus a make whole premium if such redemption occurs prior to December 15, 2011.

After December 15, 2011, the Senior Notes may be redeemed at redemption prices ranging from 105.125 percent reducing to 100 percent on December 15, 2013 and thereafter.

The company may redeem up to 35 percent of the of the Senior Notes prior to December 15, 2010 at a percent of the prredemption price of 110.25 incipal amount plus accrued interest with the proceeds of certain equity offerings, provided that at least 65 percent of the aggregate principal amount of the Senior Notes remains outstanding on existing terms.

Upon a change of control of the company, the holders of the Senior Notes may require Connacher to purchase the Senior Notes at redemption prices noted above, with a minimum price of 101 percent of the principal amount to be repurchased.