A roundup of some of the North American equities making moves in both directions today
On the rise
NFI Group Inc. (NFI-T) jumped 3.5 per cent on Tuesday after announcing it has acquired Alexander Dennis Limited, a leading bus and coach manufacturer and the No. 1 global producer of double deck buses, for a total transaction value of £320 million (about US$405-million) on a cash-free, debt-free basis.
“This is a transformational acquisition for NFI to become a global bus manufacturer,” said president and CEO Paul Soubry in a release. “ADL is the UK’s number one bus manufacturer and the number one global producer of double-deck buses, with an established international presence and is recognized as a leader known for innovative products and a commitment to quality and service. We’re thrilled to have ADL join the NFI family in a transaction that we believe will drive our business forward by combining joint strengths in engineering, sales, new product development and manufacturing with NFI’s expertise in Operational Excellence, insourcing, fabrication and systems management.”
In a research note, AltaCorp Capital analyst Chris Murray said: “Overall, we view this transaction positively, as we believe ADL was the most logical solution to support the Company’s international growth. We believe that there are a number of synergies that will be realized, which should continue to drive earnings growth at NFI, benefitting all shareholders.”
PSCo, a subsidiary of Xcel Energy, Inc. (XEL-Q), is the current customer under the Manchief Power Purchase Agreement (PPA).
Manchief is an approximately 300-megawatt gas-fired peaking facility that entered commercial operation in July 2000.
“We are pleased to announce this transaction, which is a positive financial outcome for Atlantic Power and also helps our customer to meet its power needs,” said Atlantic Power president and CEO. “By retaining Manchief for the next three years, we will continue to realize the cash flows for the remaining PPA term. In addition, upon expiration of the PPA in 2022, the sale of the plant will provide us with a cash purchase price that eliminates uncertainty about post-PPA revenue and will support continued debt reduction.”
Bombardier Inc. (BBD-B-T) finished flat after announcing on Monday evening that Bombardier Transportation has been named preferred bidder in a $4.5-billion contract to build and supply a new monorail system in Egypt’s capital.
The company said the potential value for the design and build is US$1.3-billion with an operations and maintenance deal valued at about US$1.2-billion over 30 years.
The 54-kilometre monorail will connect East Cairo with the New Administrative City and a second 42-kilometre line will connect 6th October City with Giza.
It will deliver the project in partnership with two Egyptian companies Orascom Construction and the Arab Contractors.
On the decline
For the quarter that ended Apr. 30, Scotiabank reported profit of $2.26-billion, or $1.73 per share, compared with profit of $2.18-billion, or $1.70 a share, a year ago.
Husky Energy Inc. (HSE-T) erased early gains and closed lower by 0.4 per cent on Tuesday after announcing before the bell it has nearly doubled its free cash flow target over five years and cut its capital spending.
Pointing to “a focus on generating increased free cash flow,” Husky said total free cash flow before dividends is expected to reach $8.7-billion between 2019 and 2023, compared with previous estimate of $4.8-billion between 2018 and 2022.
The Calgary-based expects to spend an average of $3.15-billion annually, compared with its prior estimate of $3.5-billion.
“Husky’s updated five-year plan demonstrates strong capital discipline in the current environment. The plan achieves a significant increase in free cash flow while increasing production by about 100,000 barrels per day through 2023,” said chief executive officer Rob Peabody in a release. “The Company’s strong balance sheet remains a competitive advantage and with little need to allocate any free cash flow toward debt repayment, we can prioritize shareholder returns through growing a sustainable cash dividend."
Raymond James analyst Andrew Bradford said: ““Here’s a well-tested fundamental truth of investing: well-incentivized C-suite executives don’t generally retire, resign, or otherwise gracefully depart just before things are about to improve. The opposite is far more often the case; and we think so here as well.”
“We are committed to returning significant capital to shareholders, including providing investors with a stable and growing dividend. The increase announced today demonstrates the strength of our integrated business model and confidence in our ability to generate strong and growing cash flow,” said president and chief executive officer Chuck Magro.
In a presentation to investors in Toronto on Tuesday, Mr. Magro said the fertilizer producer is evaluating whether to expand its annual production capacity by 5 million tonnes after 2023. He said the additional capacity would consist of expansions to existing Canadian mines during the next decade.
Crombie Real Estate Investment Trust (CRR-UN-T) was down 1.6 per cent after announcing it has entered into a second agreement of purchase and sale to sell an 89-per-cent non-managing interest in a 15-property portfolio for an aggregate purchase price of approximately $193.3-million to an affiliate of Oak Street Real Estate Capita, LLC.
The New Glasgow, N.S.-based REIT will retain an 11-per-cent ownership interest and will continue to manage and operate the properties.
The transaction is scheduled to close in the fall of 2019. The first transaction announced with Oak Street closed on April 25.
“This partial disposition is another example of our team’s solid execution of our strategy,” said president and chief executive officer Don Clow. “Priced in line with IFRS fair values, it provides important funding to facilitate significant progress towards completion of our first five major development projects, which are expected to be nicely accretive to Net Asset Value and AFFO. This transaction strengthens our balance sheet through debt reduction and enables pre-funding of our major development activities well into 2020, aligning with our long-term funding strategy.”
With files from staff and wires