Share on emailEmailShare on printPrintAtlantic Power: The Walking Dead
By Brad Prigmore - March 6, 2013 | Tickers: AT, DUK | 0 Comments
Brad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a stock with the dubious at best recent history of Atlantic Power (NYSE: AT), hope is your worst enemy. Hoping for a near term or 'dead cat' bounce to exit. Hoping for new investors to support the now crippled dividend that even after being cut by 65% still has a payout ratio of nearly 100%. Hoping for management to be completely honest with shareholders going forward. With the current hypnotizing drop of epic proportions and paltry guidance for the remainder of 2013, I feel this stock has been fatally bitten by the insurmountable debt curse of inept management and is bound to wander the Canadian wilderness looking for distributable cash flow like brains until someone can slay the infected management.
Complicating management’s cash flow projections even further is the fact that negotiations with the government of the Canadian province of Ontario over the renewal of their Tunis project’s contract have no clear timeline for conclusion. Management described the outcome as “uncertain” and noted that “recent signals are increasingly challenging.” Atlantic Power also adopted a shareholder rights plan, also known as a "poison pill" provision. It will effectively be giving Atlantic Power the power to deter takeovers, denying shareholders their only real exit chance. Even though the stock is down an astonishing 40% in just two days, I must ask you this question before you commit any hard earned capital to this corporation. Is it in your best interest to do business with people who are willing and able to withhold crucial information to the detriment of stockholders?
I am no legal expert and what they may or may not have excluded in their filings could very well have