Globe says Poseidon takes hit as dividend suspended

2012-12-28 09:54 AT - In the News

 

The Globe and Mail reports in its Friday edition Poseidon Concepts, a Bay Street favourite only last month, is leaking value at a rapid pace as it grapples with accounts receivable questions and the threat of an industry slowdown. The Globe's Tim Kiladze and Carrie Tait write that shares in Poseidon have plummeted about 90 per cent since its November earnings, wiping out about $1-billion in value. Earlier Thursday, the company suspended its monthly dividend and warned that "exploration and development activity has slowed considerably," meaning fewer oil and gas explorers need its services. The drop marks a drastic change of heart from investors. Until November, Poseidon was in good shape, paying a monthly dividend of nine cents per share, and its stock price held firm around $15 for much of the year. Many analysts predicted it was well-suited for growth. Poseidon also said it is forming a special committee to probe its accounts receivables, which came into question after nearly $10-million of them were written off in November. Analyst Michael Mazar at BMO Nesbitt Burns believes "asset value is the best way to value the shares and our estimate of net asset value is in the range of 80 cents to $1 per share."