A roundup of some of the North American equities making moves in both directions today
On the rise
Magna International Inc. (MG-T) soared after announcing a joint venture with South Korea-based LG Electronics Inc. that will make key components for electric cars.
The joint venture, tentatively called LG Magna e-Powertrain and valued at US$1-billion, will manufacture e-motors, inverters and onboard chargers, according to LG Electronics.
The deal expands a wave of consolidation among suppliers aiming to capture a growing market for electric vehicle, e-axle systems, which combine electric motors, power controls and driving gears in one unit. Earlier this year, gear maker BorgWarner Inc acquired rival Delphi, and Japanese manufacturers Aisin Seiki Corp, Denso Corp and Toyota Motor Corp have created a new e-axle venture called BluE Nexus.
LG Electronics is an affiliate of South Korea’s fourth-largest conglomerate, with interests ranging from electronics, including smartphones, to home appliances. LG Group’s major affiliates include LG Display Co Ltd, which counts Apple Inc as its customer, as well as LG Chem Ltd, whose wholly owned LG Energy Solution subsidiary provides EV batteries to Tesla Inc.
LG will own 51 per cent of the new company and Magna will own 49 per cent, LG said.
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Mogo Inc. (MOGO-T) jumped after announcing it plans to make an initial corporate investment of up to $1.5-million, representing 1.5 per cent of its total assets as of the end of the third quarter, in bitcoin.
The Vancouver-based fintech firm said it will consider additional investments in 2021 as it monetizes its $17-million investment portfolio.
“We are strong believers in bitcoin as an asset class and believe this investment is consistent with our goal to make bitcoin investing available to all Canadians. In addition, we believe bitcoin represents an attractive investment for our shareholders with significant long-term potential as its adoption continues to grow globally,” said President and CFO Greg Feller.
ImmunoPrecise Antibodies Ltd. (IPA-X) jumped in the wake of announcing it has approved for listing on the NASDAQ Global Market. Trading on the Nasdaq is expected to commence at market open on Dec. 30.
In a research note, Industrial Alliance Securities analyst Chelsea Stellick said: “We believe this is extremely positive for the name as it will increase the Company’s visibility and investor base. We believe this is timely as there is increasing evidence surrounding the mutation of the SARS-CoV-2 virus, which will further push interest and demand for IPA’s PolyTope formulation. We expect IPA to engage in a preclinical trial examining the safety, tolerability and efficacy in the SARS-CoV-2 Syrian hamster model in new year. Lastly, a competing antibody CRO listed on the Nasdaq, AbCellera received tremendous interest from investors, and is currently trading over US$12B. With so much capital chasing a closely comparable company we expect this bodes well for IPA’s NASDAQ debut.”
Turquoise Hill Resources Ltd. (TRQ-T) rose after saying late Tuesday it intended to pursue “gold streaming” and medium-term debt offering transactions for its Oyu Tolgoi copper and gold project in Mongolia.
The streaming transaction would involve “a significant up-front payment” to Oyu Tolgoi, as well as deferred payments based on gold “spot” prices, Turquoise Hill said.
Streaming is a type of alternative finance that generally involves an upfront payment by the streamer to a miner, which repays the loan by supplying metal at a later date.
The potential transaction will be in exchange for deliveries to one or more streamers of an agreed portion of gold produced from the Oyut deposit, the company added.
It was also considering one or more offering of global medium-term debt by Oyu Tolgoi with a tenor of at least 10 years. It would require Oyu Tolgoi to make a “bullet” repayment of the principal at maturity.
“We will now focus on finalising terms for a streaming transaction as soon as possible, and on completing preparations necessary for a potential inaugural offering of (global medium term notes/bonds) later in 2021,” Chief Financial Officer Luke Colton said.
The Oyu Tolgoi deposit in south Mongolia is jointly owned by Rio Tinto-controlled Turquoise Hill and the Mongolian state.
The U.S. government will pay Pfizer Inc. (PFE-N) nearly US$2-billion for 100 million additional doses of its COVID-19 vaccine to bolster its supply as the country grapples with a nationwide spike in infections, sending the drugmaker’s shares higher on Wednesday.
The company will deliver at least 70 million doses by June 30 and the rest no later than July 31, Pfizer said, bringing the total number of doses to 200 million for a total price of about $4 billion.
The new deal comes amid a jump in U.S. coronavirus infections that added more than a million new cases in just six days, according to a Reuters tally.
Pfizer’s vaccines are already being rolled out across the country after the shot won emergency use authorization earlier this month.
“This new federal purchase can give Americans even more confidence that we will have enough supply to vaccinate every American who wants it by June 2021,” U.S. Department of Health and Human Services Secretary Alex Azar said in a statement.
“Securing more doses from Pfizer and BioNTech for delivery in the second quarter of 2021 further expands our supply of doses across the Operation Warp Speed portfolio.”
The government also has the option to acquire up to an additional 400 million doses of the vaccine.
Cineplex Inc. (CGX-T) declined after saying it is selling its head office building in Toronto for $57-million as it looks for cash to pay down its credit facilities.
The theatre chain says it will continue to lease back its Toronto office for up to a decade, but plans to consolidate its office space in the city.
Cineplex has been hit hard by the COVID-19 pandemic, and said last month that 91 per cent fewer moviegoers came to theatres this summer compared to summer 2019.
Chief executive Ellis Jacob says he has high hopes for next year’s movie slate, predicting that there will be pent-up demand for social activities after the rollout of the COVID-19 vaccine.
Mr. Jacob says the $57-million gross proceeds from the sale of Toronto head office, combined with a recent agreement from Scotiabank, will provide $117-million to tide Cineplex over.
The company says that once the sale of the building closes in January, about half of the proceeds from both deals will go toward paying down existing credit facilities.
“We are confident in our response to COVID-19 and the actions we have taken to stabilize our financial position,”Mr. Jacob said in a statement.
On the decline
Vancouver-based CRH Medical Corp. (CRH-T) dropped in response to news its largest customer, United Digestive does not plan to new its professional services agreement.
Bloom Burton analyst David Martin said: “UD is likely motivated by the cash flow potential of bringing the anesthesia business in-house. However, CRH’s lead customer may also be playing hardball, with the ultimate intention of retaining CRH, but with some concessions. Employees of CRH (we suspect a material proportion of CRNAs working in the Atlanta region) are bound by non-compete agreements of up to 2 years, so it would be challenging for UD to recruit and transition an all new anesthesia staff.
“If this is a negotiating ploy on the part of UD, however, we are not aware of what concessions CRH will need to make (or can make) to renew the agreements. UD does not pay for CRH’s services (health insurers do), so CRH is not in a position to lower its prices to keep the business. Likewise, while CRH paid $61-million in 2014 to buy the business that serves the UD centers, CRH cannot now pay UD to keep the contracts.”
Nikola Corp. (NKLA-Q) fell after it said on Wednesday it has discontinued its collaboration with Republic Services Inc. (RSG-N) to develop electric waste and recycling collection trucks on worries of longer development time and unexpected costs.
Nikola in August received an order from Republic, a recycling and non-hazardous solid waste disposal firm, to develop 2,500 electric waste and recycling collection trucks.
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With files from staff and wires
David Leeder