January 21, 2009 / 8:23 PM / 9 years ago

Nova Chemicals shares plunge on liquidity concerns

CALGARY, Alberta, Jan 21 (Reuters) - Nova Chemicals Corp NCX.TO shares plunged by more than a third on Wednesday, after a report raised liquidity concerns about Canada’s largest manufacturer of raw plastics.

Nova was down C$1.85, or 31 percent, at C$4.20 by late afternoon on the Toronto Stock Exchange, on a volume of 1.78 million shares, more than three times the three-month average. Earlier they touched C$3.95, down 35 percent.

Prior to Wednesday’s drop, the stock had fallen 78 percent over the past 12 months.

The company’s bonds also fell. Bonds that are due to be repaid in April plunged on jitters over Nova’s ability to repay the $250 million in debt. The 7.4 percent bonds due April 1 dropped 18 cents on the dollar to 62 cents, yielding 338 percent, according to MarketAxess.

“Ethylene market conditions have deteriorated substantially,” said Carl Blake, an analyst at Gimme Credit. “Nova has 250 million of bonds that come due in April. There are concerns that they will not be able to refinance the debt.”

The Globe and Mail newspaper reported on Wednesday that Nova has C$1.1 billion in debt coming due over the next two years and has gone to its bankers to seek better terms.

A spokesperson for Nova could not be immediately reached for comment.

$1=$1.26 Canadian Reporting by Scott Haggett and Karen Brettell; editing by Rob Wilson

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