TSX may rise with commodity prices, eyes CIBC

CANADA STOCKS-TSX may rise with commodity prices, eyes CIBC


08:12 EDT Wednesday, August 26, 2009

TORONTO, Aug 26 (Reuters) - Toronto's main stock index may rise at the open on Wednesday, bolstered by higher commodity prices, while investors will also digest quarterly results from Canadian Imperial Bank of Commerce .

The S&P/TSX composite index <.GSPTSE> finished Tuesday's session 1.21 percent higher at 10,920.53, boosted by financials as Bank of Montreal reported solid results.

Quarterly results from the country's big banks this week remain the key focus for market direction. Financials are the most heavily-weighted group on the TSX, about a third of the weighting.

Here is some of the news that may affect the market.

CIBC

Canadian Imperial Bank of Commerce, the country's fifth-largest bank, reported a higher quarterly profit, mainly on strong performance of its core retail and wholesale banking businesses and lower expenses. [ID:nN24133906]

ELDORADO GOLD

Eldorado Gold Corp said it will buy Sino Gold Mining for C$2.0 billion, in an all-share transaction to give it greater exposure to China's growing gold industry. The offer was worth A$7.24 per Sino Gold share, a premium of 21.3 percent, based on the companies' closing share prices on Tuesday. [ID:nSYD472825]

COMMODITIES

Gold rose towards $950 an ounce as the dollar weakened against the euro, boosting interest in the precious metal as an alternative asset. [ID:nLQ723905] Oil prices recovered early losses but remained below the 10-month high hit in the previous session. [ID:nSP475982]

CAE

Flight simulator maker and aviation training company CAE Inc said it received a series of military contracts valued at more than C$100 million. Key customers included Eurocopter, Airbus Military and L-3 Communications Holdings Inc , the company said. [ID:nBNG489391]

RESEARCH ROUNDUP:

Following is a summary of research actions on Canadian companies reported by Reuters on Wednesday. For more, please double click [RCH/CA]

* Genuity raises Bank of Montreal price target

* RBC raises Alimentation Couche Tard price target

($1=$1.09 Canadian)

(Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)

Petrolifera rolls on desperation financing

Petrolifera rolls on desperation financing
Andrew Willis
RTGAM






Shedding debt can be tough on equity holders, as Petrolifera Petroleum showed with a recent financing.

Petrolifera found itself in a bind after cancelling a planned sale of oil and gas properties in Argentina. The properties went on the block as the junior oil company moved to pay down loans, only to find there no buyers at an acceptable price. Tristone Capital was the financial advisor on the failed sale.

A debt-heavy balance sheet meant a sea change in sentiment on Petrolifera, which was a market darling last summer, selling stock at $9.

This year, the stock has underperformed oil and gas peers, touching lows of 75 cents.

To put its finances back in order, Petrolifera raised $50-million in a deal that closed last week/ The company sold 56.8 million units at 88 cents each. Each unit consists of a Petrolifera share and half a warrant, and the warrant can be converted into stock at $1.20 per share over the next two years.

Thomas Weisel Partners, Cormark Securities and RBC Dominion Securities led the financing. Connacher Oil and Gas, a minority shareholder, bought a portion of the underwriting to maintain a 24 per cent stake in Petrolifera.

"While highly dilutive, the financing materially improves Petrolifera's balance sheet," said a report Monday from CIBC World Markets analyst Robert Par�. He said the company now has considerable financial flexibility, with $50-million available on a $100-million credit facility, and Mr. Par� has a $1 target price on the stock, down from $1.50, to reflect the dilution that came with last week's financing