Hot Times in the Frozen North – A Valuation of Qulliq Energy Corporation of Canada

Valuation of Crown Corporations, Crown Corporations, Ian Madsen

Qulliq Energy Corporation, ‘QE’, is the electric power utility for Nunavut Territory in northeastern Arctic Canada. It could be worth as much as $255M were it divested; or, it could be worth less if its expensive diesel-fuelled power generation business experiences adversity. As a business, making the very optimistic assumption that it can convert its stated ‘comprehensive income’ into free cash flow (not recently, but it did so in 2008-12), its value, on a fully taxed basis (as a Crown corporation, it pays no tax, now), is estimated between $143M to $1,001M; more likely closer to the lower figure. Using comparable Canadian non-renewable electric utility firms, the range is $166M to $397M. It could approach the highest figure if it shows clearer signs that it is evolving towards free cash flow generation and away from heavy reinvestment in costly diesel generators.

Read the entire Valuation here: VS20_Qulliq-Valuation_JA1519_F1