Morningstar cuts Chorus valuation

TOM PULLAR-STRECKER
Last updated 16:05 04/12/2013

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Analyst Morningstar has slashed its valuation of Chorus shares from $3.60 to $1.60.

Morningstar said it believed the company might need to raise $400 million from shareholders by June and could have to price any rights issue as low as $1-a-share.

Chorus shares were trading at $1.45 in mid-afternoon trading, which Morningstar said was fair value.

Morningstar said it didn't expect Chorus to pay any dividends in the near term and "an adverse regulatory regime and long-term regulatory uncertainty" would preclude it from earning excess returns over and above its cost of capital for the foreseeable future.

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