Billionaire Li Ka-Shing’s oil sands investment is burning, and a few analysts are calling on him to stop the damage. Shares of Calgary-based Husky Energy Inc. have plunged over 80% since its 2008 summit on a myriad of causes: a slip in oil prices, a dividend suspension, a production cut due to a close name with an iceberg and a failed C$2.75 billion hostile takeover bid for MEG Energy Corp.
That has led to the bulk stake owned by Li losing C$26.5 billion ($20 billion) is worth, based on data collated by Bloomberg and Hutchison Whampoa, now owned by CK Hutchison Holdings, became Husky’s major shareholders in 1991, according to Husky Energy’s web site. He retired as head of CK Asset and CK Hutchison Holdings Ltd. last year and handed over the controls to his eldest son Victor Li.
The slip in the firm’s share price has drawn RBC Capital Markets analysts led by Greg Pardy to consider whether the company ought to consider going private to seize the hole between its market value and its underlying worth, and so it might make the right strikes without market scrutiny.
While the feasibility of taking Husky private, which is about 69% owned by Li, would make sense, Husky’s decrease free money flow level indifference with its rivals may not make this an easy task, according to Canoe Financial’s senior portfolio manager Rafi Tahmazian. He added that Asian Mogul Li must fork out money over the following few years to meet capital responsibilities should he decide to take the company private.