A roundup of some of the North American equities making moves in both directions today
On the rise
DHX Media Ltd. (DHX-T) rose over 11 per cent on Monday on a premarket announcement that it plans to change its name to WildBrain, the name of its child-focused YouTube business, and launching a reorganization of the company.
The producer and distributor of child and youth-oriented programming says its YouTube business has been renamed WildBrain Spark.
The company also says chief operating officer Aaron Ames has been appointed as chief financial officer to replace Doug Lamb, who has decided to step down.
Apple Inc. (AAPL-Q) rose 0.5 per cent after U.S. trade regulators approved 10 out of 15 requests for tariff exemptions by the iPhone maker.
The move by U.S. officials could make it easier for both Apple and small makers of gaming computers to assemble devices in the United States by lowering the costs of importing parts.
Apple did not say why it requested the exemptions, but the requests were for components such as partially completed circuit boards. Apple manufactures its Mac Pro computers in Texas, making the machine immune from tariffs, but such intermediate parts were subject to the levies.
Home Capital Group Inc. (HCG-T) increased 3.4 per cent after it announced the pricing of a $425-million private placement of residential mortgage-backed securities by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust. The company said the securities are “backed by a portfolio of near-prime, uninsured, residential mortgages and are comprised of A, B and Z tranches that aggregate $500-million.”
In a research note, Raymond James analyst Brenna Phelan said: “The issuance represents diversification benefits, and if the market grows, would allow HCG to tilt its funding more to these types of deals if the deposit market periodically becomes more competitive. Mortgages backing this RMBS are representative of Home’s entire portfolio and were not hand-selected for their superior credit quality/LTV or other metric. The Aaa rating by Moody’s reflects the agency’s view that the terms and packaged collateral of the A tranche are high-quality investment grade. The takeup of the B and Z tranches by Home itself was planned from the beginning for this inaugural issuance and does not reflect lack of investor demand.
"From a higher level, this deal represents another example of funding for lenders in Canada becoming more innovative. Private non-prime consumer lender Fairstone Financial completed an ABS transaction for $322.44 million in Mar-2019, marking the first personal loan ABS transaction in Canada. Its A tranche of $225 million was rated Aa2 by Moody’s - two notches lower than HCG’s deal’s A tranche. In Aug-2019, Equitable Bank disclosed that it was in the process of developing a covered bond program - another funding option for uninsured mortgages.Growing institutional demand for these types of securities is a positive for the outlook for funding diversification of non-bank lenders, in our view.”
Tidewater Midstream and Infrastructure Ltd. (TWM-T) rose 5.5 per cent following a Monday announcement that it completed commissioning and start-up of the Pipestone Montney, sour deep-cut gas processing complex.
“With the start-up of this strategic asset, Tidewater is well positioned in the Grande Prairie area to offer Montney producers natural gas and liquids processing, egress and storage opportunities," said Vice President of Business Development Toby McKenna.
On the decline
Boeing Co. (BA-N) was down 0.6 per cent after a Reuters report that European antitrust regulators were set to investigate the plane maker’s US$4.75-billion bid for the commercial aircraft arm of Brazil-based Embraer SA.
Additionally, the chief of the U.S. Federal Aviation Administration is set to detail progress on the Boeing 737 MAX aircraft to international air regulators, who are divided about returning the grounded jet to flight after two fatal crashes.
First Quantum Minerals Ltd. (FM-T) plummeted 9.7 per cent after saying on Monday it had no knowledge of any potential takeover bids but confirmed it was in talks with Jiangxi Copper Co Ltd for a potential sale of a minority interest in its Zambian copper assets.
The company’s shares have risen about 20 per cent since Bloomberg reported on Thursday that First Quantum was attracting preliminary takeover interest and is working with defense advisers to weigh its options.
In Zambia, the company has been embroiled in a dispute with the government after being handed a $5.8 billion bill for unpaid import duties last year.
Osisko Gold Royalties Ltd (OR-T) dropped 10 per cent after it announced an agreement to acquire the share of Barkerville Gold Mines Ltd. (BGM-X) it doesn’t already own. Osisko said it currently holds approximately 32.6 per cent of the outstanding Barkerville shares.
Under the terms of the arrangement, each shareholder of Barkerville (excluding Osisko) will receive 0.0357 of a common share of Osisko for each share of Barkerville. The company said the exchange ratio implies consideration of 58 cents per Barkerville share based on Friday's closing price. That implies a total equity value of approximately $338-million on a fully-diluted "in the money basis," inclusive of Barkerville shares held by Osisko, according to the release.
Shares of Barkerville were 8.7 per cent higher.
Industrial Alliance Securities analyst George Topping said: “OR is well positioned with a strong balance sheet to get the project into production without the need for dilution as was the case with BGM. For OR, the deal was a discount to BGM’s recent PEA which yielded an after-tax NPV5% of $402-million (based on just 50 per cent of the current resource) and cheap on an in-ground M+I+Inf current resource basis at US$58/oz paid. The resource is still growing and will likely double through infill and expansion drilling by the time it is in production (estimated 2021). The market wasn’t pricing in the future resource growth for BGM, nor had it participated fully in the recent gold rally, due to the funding overhang, thus on paper the deal is good value for OR while disappointing for BGM shareholders who no longer get direct exposure to Cariboo’s future growth.”
Brookfield Asset Management Inc. (BAM-A-T) was down 1.8 per cent after announcing it has agreed to form a joint venture with Dubai’s Meraas Holding valued at five billion dirham ($1.8-billion) to own and operate Meraas’s retail assets.
The assets include Dubai retail sites the Beach, City Walk and La Mer, Meraas said in a statement on Sunday.
The statement did not disclose how much each party held in the joint venture. The assets were previously owned by Meraas, which says its portfolio includes more than 1,400 retail units.
See also: Which Brookfield should you own? Here’s a simple solution
With files from Brenda Bouw, staff and wires
David Leeder