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BNPUF - Bonavista Energy To Recapitalize: Stay Away
Bonavista Energy Corp
Over the last two years, I wrote several articles that described Bonavista Energy (BNPUF) as a risky bet on higher oil and gas prices. Therefore, given the difficulties of the Canadian producer because of its huge debt load in the context of depressed commodity prices, the recapitalization transaction announced last Friday didn't surprise me.
Since existing shareholders would own a small share (7%) of the proposed equity, the stock price dropped by more than 40% after the release of the news. In addition, the recapitalization will reduce the company's debt load, making Bonavista less risky.