Who is going to buy Husky Injection Molding Systems Ltd.? This is a question we've have been asking since March, when company founder Robert Schad announced that Husky had hired Citigroup Global Markets to conduct a review that could result in a sale of the company.

Today, the Toronto Globe & Mail has an interesting story that speculates on the answer to this question. Some of the conclusions are very interesting -- a deal looks somewhat less likely now, because of a slowdown in the private equity market and a rising Canadian dollar. And if a deal does happen, it could be with a Husky competitor.

The story has some specific details, so it's obvious that the reporter, Andrew Willis, has an inside source with knowledge of the process. For example, he says:

To date, this corporate drama saw Citigroup gather initial expressions of interest from potential buyers. Mr. Schad and the board screened these letters over the past two months. Those that passed this first round of scrutiny were invited to make more detailed bids at the end of June.

While Husky executives say they are in talks with potential buyers, investment banking sources report the private equity funds are abandoning the chase left and right. Mr. Schad was always going to be a difficult seller to deal with - he told a U.S. trade publication that he had no interest in selling to "vultures." The headwinds now facing both Husky and the funds make the buyout even less appealing.

We're the U.S. trade publication, by the way.

This part of the story, about which companies might buy Husky, seems more speculative than the rest:

But right now, lenders would be reluctant to back a highly leveraged Husky buyout - a typical deal this size would mean borrowing about $700-million. If the banks and bond funds did cough up loans, the terms they would demand would make the purchase far more expensive than what private equity buyers faced back in March.

This is not to say there is no interest in Husky. Potential strategic bidders are likely still circling, and they include Krauss-Maffei of Germany, and Asian companies such as Mitsubishi or Toshiba. This crowd would be thrilled that private equity rivals are falling away.

Willis writes that a "hotly contested auction" for Husky "simply isn't in the cards."

So perhaps the question to ask now is this: If Schad, and Husky's other shareholders, don't get a nice premium price for the company, will they still want to make a deal?