There are definitely benefits to leveraging a business’s operation through the acquisition of debt, however, too much may cause serious financial distress. On the positive side, debt financing is relatively cheap within current market conditions, but it will increase a business’s interest payments. The five companies on our list have decided to increase its total debt by more than 1000% during the past year.
Pine Cliff Energy Ltd. (TSXV PNE) – $1.47
Oil & Gas Exploration and Production
Pine Cliff Energy Limited (Pine Cliff) is a Canada-based oil and gas exploration and production company engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids (NGL’s). Pine Cliff has, in aggregate, 24.25 gross sections of undeveloped land and is the operator of approximately 72% of the Company’s production in the area. Other areas include the non-operated properties in the Sundance Assets properties in the Harmatten, Garrington and Carstairs areas in Alberta.
- Market Cap: $345,908,578
- Revenue (LTM): $72,058,000
- Change in Debt: 23,777.5%
- Total Debt (LFY): $47,755,000
BNK Petroleum Inc. (TSX: BKX) – $0.74
Oil & Gas Exploration and Production
BNK Petroleum Inc. (BNK) is an international energy company engaged in the exploration, development, production and marketing of crude oil, natural gas and natural gas liquids. Through various affiliates and subsidiaries, the Company owns and operates shale oil and gas properties and concessions in the United States, Poland and Spain. In the United States, BNK has working interests in approximately 14,700 net acres of shale oil acreage in the Caney / Upper Sycamore formations of the Tishomingo Field, in the Ardmore Basin, Oklahoma. In Europe, the Company has a total of over one million net acres consisting of five concessions in Poland and Spain.
- Market Cap: $125,576,542
- Revenue (LTM): $23,694,114
- Change in Debt: 16,748.3%
- Total Debt (LFY): $17,892,882
ATS Automation Tooling Systems Inc. (TSX: ATA) – $15.80
Industrial Machinery & Equipment
ATS Automation Tooling Systems Inc. is a Canada-based Company engaged in providing custom designed, built and installed manufacturing solutions. The Company uses its knowledge and global capabilities to serve the automation systems’ needs of multinational customers in industries, such as life sciences, computer and electronics, energy, transportation and consumer products. ATS has approximately 27 manufacturing facilities and 47 offices in Canada, the United States, Europe, Southeast Asia and China. The Company has developed many automation products, including ATS Supertrak Modular Conveyor system, ATS850 Clean Room Conveyor, Sortimat Birkman Feeder Technology, ATS Omnitrak and ATS Cortex System, among others.
- Market Cap: $1,443,934,408
- Revenue (LTM): $936,077,000
- Change in Debt: 4,712.6%
- Total Debt (LFY): $291,257,000
Diversified Royalty Corp. (TSX: DIV) – $3.09
Investment Banking & Brokerage Services
Diversified Royalty Corp. (DIV) is a Canada-based multi-royalty corporation engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. The Company’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors. In September 26, 2014, the Company completed a transaction with Franworks Franchise Corp. (Franworks) whereby the Company acquired an approximate $12 million annual top-line royalty. Franworks is a mid-tier casual dining group in Canada with 62 Original Joe’s, 10 State & Main and 14 Elephant & Castle restaurants in operation, located in Western Canada (74), Ontario (four) and the United States (eight, all Elephant & Castle). Approximately 40% of the restaurants are wholly owned and operated by Franworks and 60% are franchised locations (65% of which are joint ventures with Franworks).
- Market Cap: $215,845,254
- Revenue (LTM): $6,162,760
- Change in Debt: 2,179.1%
- Total Debt (LFY): $14,883,730
PetroShale Inc. (TSX: PSH) – $1.25
Oil & Gas Exploration and Production
Petroshale Inc. is a Canada-based oil-weighted development and production company engaged in acquisition, development and consolidation of interests in the areas of North Dakota Bakken. The Company’s focus is on land interests with near term drilling exposure. The Company’s business platform is based upon two defining attributes: a non-operating model combined with its strategic partnership with Slawson Exploration.
- Market Cap: $34,468,400
- Revenue (LTM): $7,164,000
- Change in Debt: 1,352.0%
- Total Debt (LFY): $47,931,000
