Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.
Private equity giant Blackstone Group Inc. is buying Dream Global Real Estate Investment Trust (DRG.UN-T), a Canadian company founded by real estate magnate Michael Cooper that specializes in European properties.
Blackstone is to pay $16.79 in cash per share of Dream Global, for a total purchase price of $3.3-billion – an 18.5-per-cent premium to Friday’s closing value. After accounting for Dream Global’s debt, the deal is worth $6.2-billion.
Based in Toronto and run by Jane Gavan, one of Mr. Cooper’s long-time business partners, Dream Global has been publicly traded since 2011. The real estate trust, formerly known as Dundee International REIT, started out by acquiring properties leased to Deutsche Post, Germany’s post office, and over time grew to focus on properties primarily based in Germany and the Netherlands.
By acquiring Dream Global, Blackstone is adding exposure to European real estate, which is an attractive asset class in a world where trillions of dollars worth of debt now pays negative yields.
The deal also signals Blackstone’s growing interest in Canadian REITs. In early 2018, the American company acquired Pure Industrial REIT, which owned industrial properties across Canada and select U.S. markets and whose tenants included IKEA Distribution Services and Fedex, for an equity value worth $2.5-billion.
Dream Global’s acquisition is a significant milestone for Mr. Cooper. He is best known for running Dream Office REIT and made a splash domestically in 2012 by acquiring Scotia Plaza in the heart of downtown Toronto for $1.3-billion.
-Tim Kiladze and Rachelle Younglai
“We are disappointed that talks have broken off and firmly believe that resuming discussions with the assistance of an independent-mediator is the best way for both parties to resolve our differences,” said CEO Don Demens. “It is surprising that the USW continues to refuse to give the mediation process the opportunity to work, given what is at stake for our employees, customers and the communities in which we operate.”
Western said the strike affects all the company’s USW certified manufacturing and timberlands operations in B.C.
Summit is also acquiring a 50-per-cent interest in 49 acres of development land in the same industrial park for $13.8-million and entering into a 50/50 joint venture partnership with Cooper Construction Ltd. to fully develop the property adding an estimated 774,000 square feet of Class A light industrial space over the next few years.
"We are very pleased to be expanding our presence in the Greater Toronto Area region with these well-located properties," commented Paul Dykeman, CEO.
Cresco Labs Inc. (CL-C) announced an expansion of its presence in Nevada and Arizona through the acquisition of Tryke Companies, a seed-to-sale cannabis company. The transaction includes six prime Reef Dispensary locations in Nevada and Arizona, expanded licensed cultivation and process capacity in Las Vegas and Phoenix and entry into the Utah market, the company stated.
The purchase consideration is approximately US$252.5-million for Tryke operating assets plus US$30-million for Tryke real estate assets. The consideration will be comprised of a mix of Cresco Labs shares valued at approximately US$227.5-million, which will be subject to a nine- to 21-month lock-up agreement following closing, and approximately US$55-million in cash.
TransAlta Corp. (TA-T; TAC-N) announced its Clean Energy Investment Plan, which includes converting its existing Alberta coal assets to natural gas and “advancing its leadership position in renewable energy.”
The company said the total cost of the plan is expected to be approximately $2-billion, which includes approximately $800 million of renewable energy projects already under construction, the company stated.
"TransAlta's plan includes converting three of its existing Alberta thermal units to gas in 2020 and 2021 by replacing existing coal burners with natural gas burners," it stated. "The company will also convert two of its units to highly efficient combined-cycle natural gas units in the late 2023 to late 2024 period.
It said the plan will be funded from the cash raised earlier this year through the strategic investment with an affiliate of Brookfield Renewable Partners, cash generated from operations, and through TransAlta Renewables Inc. The company also said it “remains committed” to returning up to $250-million to shareholders over the next three years through share repurchases and reducing its corporate-level debt by $400-million in 2020.
“The sale of Osisko’s offtake contract on the Brucejack mine will result in the elimination of a low margin offtake contract and allow better utilization of our working capital," stated Osisko CEO Sean Roosen. "Since acquiring the Orion portfolio in 2017, we now have received approximately US$164.3-million from Pretium, including proceeds from the buyback of the stream and sale of the offtake as well as cash margins to date from the offtake, compared to a book value of approximately US$147.3-million for our investment in Pretium.”
The offtake agreement, dated September 15, 2015, was entered into by Pretium as part of the construction financing package for the Brucejack Mine, Pretium stated. "With the repurchase of the offtake agreement, all components of the 2015 construction financing package will be extinguished," the company stated in a separate release.
“Brucejack’s robust cash flow has enabled us to pay down the construction financing package quickly. In 2018, the first year after the start of commercial production, we repurchased 100% of the precious metals stream for $237-million and refinanced the construction credit facility with a $480-million bank debt facility. Now, we are repurchasing 100% of the offtake agreement for roughly $80-million. With the construction financing package cleaned up, we have set our sights on paying off the bank debt facility as rapidly as possible,” said Joseph Ovsenek, CEO of Pretium.
Stelco Holdings Inc. (STLC-T) announced that its wholly-owned subsidiary, Stelco Inc., plans to offer approximately US$300-million in aggregate principal amount of senior secured notes due 2024. Stelco said the notes will be offered by a syndicate of initial purchasers through a private placement. Stelco said it intends to use the net proceeds for capital expenditures and general corporate purposes, “which may include potential acquisitions, joint ventures and strategic alliances or distributions to the company.”