A roundup of some of the North American equities making moves in both directions today
On the rise
West Fraser Timber Co Ltd. (WFT-T) jumped 3.3 per cent on Tuesday after announcing Monday after the bell its plan to permanently close its Chasm lumber mill and eliminate the third shift from its 100 Mile House lumber mill, both to occur during the third quarter of 2019.
The Vancouver-based company said the move is expected to impact approximately 176 employees at Chasm and approximately 34 employees at 100 Mile House. Lumber production is projected to be permanently reduced by approximately 314 million board fee. In 2018 and 2019, West Fraser will implement total temporary and permanent capacity curtailments of approximately 125 million and 614 million board feet respectively.
In a research note, Raymond James analyst Daryl Swetlishoff said: “With benchmark lumber pricing holding well belowvariable costs for much of the year to-date, a number of permanent capacity shuts have been announced in the last few months including Tolko’s mill closure and shift reduction (250 million board feet), Canfor’s closure of the Vavenby mill (250 mln bf), and both of West Fraser’s announcements (614 mln bf), this brings the cumulative capacity reduction to 1.1 bln bf. This represents 9 per cent of 2018 total BC lumber production. In addition several temporary downtime announcements have been made which total over 700 mln bf representing 6 per cent of total annual BC lumber production. While we note that this is meaningful we expect further curtailments will be necessary to balance BC lumber capacity with long-term log supply. We see potential for further curtailments as winter log decks are depleted and the July 1 ~$45/mfbm stumpage hikes hit the market.”
Norbord Inc. (OSB-T) r0se 0.3 per cent after it reported that its oriented strand board (OSB) mill in High Level, Alta., has temporarily suspended production due to the wild fires burning nearby in the region and in order to comply with an evacuation order in MacKenzie County. The company also anticipates an evacuation order being issued for the town of High Level .
Earlier, it announced its intention to launch an offering of approximately US$350-million in senior secured notes.
The notes will rank pari passu with the company’s existing 5.375-per-cent senior secured notes due 2020 and 6.250-per-cent senior secured notes due 2023 and committed revolving bank lines.
Pala will receive 100 per cent of Cobalt 27′s issued and outstanding common shares, other than the approximately 19 per cent that it ready owns. Cobalt 27 shareholders will get $5.75 per common share, comprised of $3.57 in cash plus $2.18 in shares of a newly listed company to be named Nickel 28 Capital Corp.
“Nickel 28 will be created to hold Cobalt 27′s joint venture interest in Ramu, a low-cost, long-life producing nickel-cobalt mine, its royalty portfolio on future projects including the Turnagain royalty, a royalty over one of the largest undeveloped nickel sulphide projects globally, the Dumont royalty, a shovel-ready nickel project in Canada and certain equity positions including in Giga Metals Corporation,” it said. “Nickel 28 will be funded with US$5-million in cash at inception with no corporate debt. The Company’s management believes Nickel 28 will continue to provide shareholders with direct exposure to the electric vehicle market through nickel and cobalt exposure. Pala will retain a 4.9-per-cent interest in Nickel 28, and the current Cobalt 27 leadership team will continue as the board and management of Nickel 28.
Cenovus Energy Inc. (CVE-T) was 1.5 per cent higher after revealing it intends to repurchase US$748-million of its debt as the result of successful cash tender offers for certain of its outstanding Notes announced on June 4.
“The repurchase demonstrates continued progress in deleveraging Cenovus’s balance sheet,” the company said.
Sun Life Financial Inc. (SLF-T) rose 1.3 per cent after announcing the establishment of SLC Management, which will combine its affiliated fixed income institutional asset management businesses – Prime Advisors, Ryan Labs Asset Management and Sun Life Institutional Investments (U.S. and Canada ) – as well as Sun Life’s general account, into a new autonomous asset management business.
SLC Management also replaces the Sun Life Investment Management brand globally, effective immediately.
Asanko Gold Inc. (AKG-T) shares increased 4.4 per cent after an equity analyst on the Street initiated coverage with a “buy” rating, believing its underperformance versus its peers presents investors with a buying opportunity.
On the decline
Hudson’s Bay Co. (HBC-T) fell 2.2 per cent after U.S. activist investor Land & Buildings Investment Management LLC, which last year owned an estimated 3 per cent of HBC’s shares, said on Tuesday that the $9.45-a-share proposal by executive chairman Richard Baker and his HBC majority shareholder group to take the retailer private is “woefully inadequate.”
Land & Buildings called on the Toronto-based department-store company to explore “strategic alternatives,” including a sale, and hire an independent investment bank to evaluate the value of HBC’s potentially lucrative real estate and retail banners.
Endeavour Silver Corp. (EDR-T) finished flat after announcing before the bell that it has received the final tailings permit for its Terronera silver-gold mine project located in Jalisco state, Mexico.
Issued by SEMARNAT, the Mexican Ministry of Environment, the permit gives the Vancouver-based company the right to store tailings from the proposed Terronera high grade, underground, silver-gold mine in a secure, filtered dry stack tailings facility adjacent to the proposed plant site.
Facebook Inc. (FB-Q) lost 0.3 per cent after revealing plans on Tuesday to launch a cryptocurrency called Libra, the latest development in its effort to expand beyond social networking and move into e-commerce and global payments.
RBC Dominion Securities analyst Mark Mahaney said: “We view Facebook’s introduction of the Libra currency as a potential watershed moment for the company and global adoption of crypto. In terms of scale and importance, we believe this new financial infrastructure could be viewed similar to Apple’s introduction of iOS to developers over a decade ago.”
The Flowr Corp. (FLWR-X) dipped 3.6 per cent after it announced that it has received a loan commitment from a syndicate of lenders led by ATB Financial, for up to $50-million of committed senior secured credit facilities. The company said it will be permitted to use a recapitalization term facility and a revolving operating credit facility for general working capital purposes and to develop its facilities.
It also announced a supply agreement with Alberta Gaming, Liquor & Cannabis.
With files from Marina Strauss, Brenda Bouw and wires