Shares in struggling soil cleanup firm Bennett Environmental Inc. plunged yesterday after the company said it will no longer offer any public forecasts of the amount of soil it will decontaminate.
Bennett shares fell by one third, closing down 32 cents to 64 cents on the Toronto Stock Exchange yesterday.
Late on Friday, after the markets closed, Bennett announced that its key plant in Saint Ambroise, Que., will reopen on Oct. 16 after a three-month shutdown. However, it will remain open only long enough to process soil that has accumulated over that time and new soil that arrives while it is open. Then it will shut down again until there is enough soil to justify reopening.
Bennett also said it no longer stands by the forecast it made on Aug. 14 that it will clean approximately 28,000 to 33,000 tonnes of material during 2006. And it will no longer give any advance information on expected volumes of soil it will process, or any other kind of financial guidance.
"The nature of the hazardous soil remediation business is such that deliveries are highly variable and subject to numerous factors outside of the company's direct influence," the company said in a statement.
Bennett spokesman Michael McSweeney said the company is just following the pattern set by other public companies in declining to give estimates for the coming months or quarters. The change, he said, was a decision of the new leadership at Bennett, which is being run by its chairman and chief financial officer while it recruits a new chief executive officer.
Former CEO Allan Bulckaert resigned in July after he and the company forged a settlement with the Ontario Securities Commission over disclosure and trading issues, and after the company agreed to reconstitute the board with more representation from institutional investors.
As for the recurring shutdown of the Quebec plant, Mr. McSweeney said Bennett is "clearly focused on EBITDA [earnings before interest, taxes, depreciation and amortization]and this is one of the ways of doing it." Because the plant's kilns take time to heat up to process material, it is cost-effective to run the plant only when there is enough material go full-throttle, he said.
Analyst Sara Elford of Canaccord Capital Inc. in Halifax said yesterday she's not surprised the latest news has caused another freefall in Bennett shares, which traded as high as $28.45 in early 2004.
Even at the current price, she still has a "sell" rating on the stock. "When you're not profitable, when you don't have a credit facility and when your cash position is dwindling, I can't rule out the potential for it to go lower from here."
Meanwhile, the firm has been hit with a lawsuit from its founder, Vancouver entrepreneur John Bennett. Last week Mr. Bennett filed a statement of claim in the Supreme Court of British Columbia alleging that Bennett Environmental owes him $52,590 in pension payments.
Mr. Bennett left the firm at the end of 2004, and the claim alleges that he has been shortchanged on retirement payments he was supposed to received in 2005 and 2006. The company also owes him $30,000 in legal and consultant fees that were spent to set up the pension, according to the claim documents filed in court.
Mr. McSweeney wouldn't comment on the lawsuit. Ms. Elford said the claim isn't financially material to Bennett, but she described it as "another nuisance" for the firm.
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