Alberta refuses to rescue Nova Chemicals Corp.

11-Feb-09
Alberta Premier's categorical refusal to rescue Nova Chemicals Corp. has not come as a surprise to many. Nova's business is viewed as faltering from bad choice of decisions by the company, including moving its headquarters from Calgary, Alberta, to the United States a decade ago. Saddled with shortly due heavy debt load and substantial cash needs, analysts are interrogating Nova's ability to avoid bankruptcy protection under the current ethylene down-cycle with weak pricing projected for the next couple of years. Nova has been the sole petrochem maker who did not clear debt during the past few years of above-normal industry profitability. Nova's Alberta assets alone would cost over US$5-billion to replace. When Nova Chemicals was launched in 1998, its assets were worth $3.9 bln, revenue totaled to $3.4 bln, and its stock was worth $31.75.
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