Citigroup has given up on garden products maker Nylex. They've cut their share price forecast, cut their rating and cut and run on their coverage altogether.
"This follows the release of another profit warning, the foreshadowing of another restructuring program and news that the company is in discussions with potential financiers to raise money to complete the program," analyst Julian Mulcahy said. "Each of these raises concerns over Nylex's long-term future.
"Most alarming is the statement that the company is in discussions with potential providers of subordinated debt and mezzanine capital, and a range of existing and potential senior debt providers.
"Given its extremely weak bargaining position, there is a major risk that Nylex (and therefore current shareholders) will get a raw deal.
"Regardless of whether or not the latest restructuring initiative makes sense or even works, the history of downgrades and false dawns will no doubt raise issues in the minds of investors."
Cutting its recommendation on the stock to a sell, Citigroup said there was more to go.
It cut its price target to 4c. Shares have close to halved in a week, closing yesterday at 5.5c.
***Wow,given the above i can't see the financiers being overly generous when you take into account that some business operations have been sold off and profit downgrades have been forecast by the company
basically its going to be a very very long long time before this company can even ever envisage reliving its glory days it once enjoyed
the only way it could possibly ever grow real earnings significantly would be to really take on more debt and purchase other businesses which in the short term looks unlikely and probably reinforces the trading at the top end of town in the past few weeks
in the short term i can't see this happening and in the long term its probably only a matter of time before the financial realities of the global market place that 'we all live in' exercise their due actions
NLX Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
