AutoCanada is still in acquisition mode amid a transformation of the dealership business in Canada from mainly single-owner stores to owners holding large groups of dealerships.Getty Images/iStockphoto
Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.
Petrowest Corp. (PRW-T) announced that BC Hydro has selected Peace River Hydro Partners, a consortium in which Petrowest is partnered with Acciona Infrastructure Canada Inc. and Samsung C&T Canada Ltd., as "the preferred proponent" for the Site C main civil works contract in the Site C Clean Energy Project. TSX shares in Petrowest jumped 82 per cent today on the news.
The main civil works is the largest single contract for construction on the Site C project. It includes the construction of an earthfill dam, two diversion tunnels, and a concrete foundation for the generating station and spillways.
"We believe this contract will almost immediately expand Petrowest's business by 40 per cent plus," commented Beacon Securities analyst Michael Mills. "We expect that annual revenues from this project, flowing to PRW, could be in the range of $80-$100 million. The majority of PRW's portion of the contract will be completed in the first five years, with the dam scheduled for completion in 2024. We had previously only factored in $10-$15mm of subcontractor revenue for PRW on Site C in 2016. We are revising our forecast for the full contract win, noting that revenues could be lumpy from quarter to quarter."
"Overall, this is a monumental win for the company and one that sets the path for the next few years. In a challenging western Canadian market, this is key. We expect this visibility to be rewarded with improved market valuation. It also increases the potential for a take-out of PRW, in our opinion," he said.
The analyst upgraded the stock to a "buy" from a "speculative buy" and raised his price target to 85 cents from 50 cents.
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AutoCanada Inc. (ACQ-T) says it plans to raise $75 million in a bought deal backed by a syndicate of underwriters led by RBC Capital Markets and Scotiabank.
The Edmonton-based auto dealership company says it plans to sell 2.95 million shares for $25.50 each as part of the offering. There's also an over-allotment option to purchase up to 442,500 additional common shares under the same terms and conditions, exercisable for 30 days after closing on Dec. 14.
AutoCanada says it plans to use the financing to reduce debt in its credit facility, "which may subsequently be redrawn and applied as needed to fund future capital expenditures, including the potential acquisition of additional dealerships, and for general corporate and working capital purposes."
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Aimia Inc. (AIM-T) says it plans to buy back an additional $50 million of its common shares in the coming months. The Montreal-based marketing and loyalty awards company, said that, at current share price levels, it plans to "aggressively repurchase shares through its Normal Course Issuer Bid (NCIB)."
"We consistently evaluate the company's capital allocation options, and at the current share price level, we believe that additional buybacks will provide the best return on capital to our shareholders," stated group chief executive Rupert Duchesne. The stock has dropped nearly 40 per cent over the past year, currently trading around $9, its lowest level since the summer of 2010.
"We do not believe that the current share price reflects the company's improving prospects and strong balance sheet. We are confident that the actions we have taken to improve operational efficiency, and the investments we have made in our core businesses in recent years, will drive an improved 2016," Mr. Duchesne said.
Aimia said it has repurchased more than 17 million shares over the past year, "returning more than $225 million to shareholders." It said the current NCIB, which expires in May 2016, enables it to buy back another 9.9 million shares.
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New Gold Inc. (NGD-N) said it has completed the previously announced sale of its 30-per-cent interest in the El Morro project to Goldcorp Inc. for $60 million in net cash ($90 million less taxes and transaction costs). Meantime, Toronto-based New Gold said its $94 million carried funding loan payable has been cancelled. New Gold will receive a 4-per-cent gold stream on gold production from El Morro, which it says will give it increased financial flexibility and beef up its balance sheet.
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Platinum Group Metals Ltd. (PTM-T, PLG-N) reported a net loss of $4.8 million or a penny per share for the year ended Aug. 31. That's down from a loss of $10.5 million or a loss of two cents per share for the same period last year. The mining company, based in Vancouver and Johannesburg, South Africa, said general and administration expenses increased to $8.3 million from $7.9 million a year earlier, but gains on foreign exchange came in at $10.7 million version $1 million the year before. The company's projects are located in the Bushveld Complex in South Africa, a major global platinum production region.
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Knight Therapeutics Inc. (GUD-T) says it will exit its investment in CRH Medical Corp. (CRH-T, CRHM-N) following early repayment of the remaining balance of $22 million (U.S.) on its secured loan to CRH.
The Montreal-based specialty pharmaceutical company said it provided a secured loan of $30 million in December to help CRH fund the acquisition of Gastroenterology Anesthesia Associates, LLC and GAA Management, LCC. Since then, CRH has raised $27.4 million of equity at $3.40 per share in March 2015, more than triple the share price from when Knight first extended the secured loan four months earlier, Knight stated. It said CRH used part of those proceeds to pay off $7.9 million of secured debt to Knight.
"We are pleased to have financed the transformation of CRH into a leading anesthesia management company. This accomplishment has been personally gratifying and financially rewarding. We love supporting well-grounded management teams achieve their lofty dreams through partnership," said Knight chief executive Jonathan Ross Goodman in a statement on Wednesday.
Meantime, CRH, which provides physicians with products and services for the treatment of gastrointestinal diseases, said Wednesday it has an agreement with the Bank of Nova Scotia for a $33 million (U.S.) credit facility to replace existing debt. It said the facility will be used to finance potential future acquisitions. CRH said it has initially been used to repay Knight and a $2 million loan to the Bloom Burton Healthcare Structured Lending Fund II.
CRH said it still has outstanding indebtedness to Crown Capital Partners for $22.5 million (Canadian). CRH said plans to use it as a revolving facility, "keeping cash balances low to further reduce interest expense," the company stated on Wednesday.
"For many years, CRH has focused on both growth and strong financial discipline, which is why we are proud to announce that our underlying business fundamentals and financial strength have enabled us to partner with Scotiabank,"stated CRH chief financial officer Richard Bear. "We have now secured a low cost of capital that will further augment our cash flow and which is also accretive to earnings per share,"
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Uranium company Energy Fuels Inc. (EFR-T, UUUU-N) says it has a deal to sell a package of non-core uranium assets to enCore Energy Corp. (UE-V) and Tigris Uranium U.S. Corp. for cash and shares as part of a cost-cutting strategy. It will own about a fifth of enCore when the deal is completed.
Energy Fuels said the deal includes mining claims and leases known as the Marquez and Nose Rock projects in New Mexico, the Moonshine project in Arizona, and the Cedar Mountain, Geitus, Blue Jay, and Marcy Lookprojects in Utah.
The company says it will receive $329,960 in cash and 14.25 million common shares of enCore. At closing, Energy Fuels will own 19.9 per cent of enCore shares and hold a seat on its board of directors.
"Energy Fuels is disposing of these properties as they do not fit into the company's long-term production plans, due to their lower relative grades and various other technical and economic considerations," the company stated on Wednesday. It said the current focus on its lower-cost projects.
"Energy Fuels is pleased to continue our asset rationalization strategy by selling certain of our non-core assets to enCore Energy, and I believe this deal makes good sense for both companies," stated chief executive Stephen Antony. "Energy Fuels is focusing on higher-grade, lower-cost and larger-scale uranium projects, while we continue to cut costs and monetize assets that do not fit our long-term business plans. We are also receiving shares of enCore Energy, a company that we believe has the ability to potentially unlock the value of the assets we are selling."