End of the Road for Mecachrome International?

The end appears near for Mecachrome International Inc. (MHRMF.PK), as investors head for the exits following last week's depressing third quarter earnings report.

Shares in the aircraft and automotive components maker, are down 33% or C$0.04 to C$0.08 Monday morning, as fears grow about Mecachrome's future.

On Friday after market close, the company announced a net loss of 20.9-million euros and said it would miss its scheduled interest payment on Senior Subordinated Notes due 2014. As a result, Mecachrome expressed considerable pessimism about its ability to stave off bankruptcy.

The company stated:

There are material uncertainties resulting from current events and conditions that create substantial doubt about the Company's ability to continue as a going concern as at September 30, 2008.  

Mecachrome added that it is reviewing and evaluating its alternatives to improve its liquidity and financial position and reduce its financing costs, which may take the form of a debt restructuring, recapitalization, potential capital infusion, or other type of transaction.

Desjardins Securities analyst placed Mecachrome's "hold" rating and C$3.60 price target under review until further discussions are had with management.

He said:

We thus believe that the probability of the stock going to zero and the company going into bankruptcy has increased significantly.