14°c Light rain showers
13°c Variable cloudiness
Winnipeg Free Press - PRINT EDITION
New Flyer shares hit the gas
New Flyer Industries is looking for partners or acquisitions, but analysts say that’s not why its stock price jumped. (JOE BRYKSA / WINNIPEG FREE PRESS ARCHIVES) Photo Store
NEW Flyer Industries shares have been on a tear the past two weeks, even though the company recently released information indicating its year-end production and order backlog are down.
At least one analyst believes the recent surge is caused by investors who are catching up to what had been a particularly underpriced stock.
But the sharp rise in New Flyer stock prices -- up 22.5 per cent since Jan. 19 -- prompted regulators to compel the company to explain the unusual run on Friday morning.
That's why New Flyer issued a press release announcing it is "holding discussions with a third party regarding a potential commercial and strategic relationship."
However, company CEO Paul Soubry said there's really nothing new.
"The TSX market surveillance people called us. We said there was nothing going on, but they said we have to tell the world something," Soubry said in a telephone interview from Edmonton, where he was meeting with customers.
The fact is, New Flyer has let it be known for some time it is talking to potential partners or merger targets and maybe even looking for potential acquisitions.
"We're out there looking, but we have nothing to announce. There's no deals closing," Soubry said.
According to a number of sources, he is not just being coy.
Trevor Johnson, an equity analyst with National Bank Financial in Toronto, said the run-up in the stock price was a result of the equity being underpriced and investors playing catch-up.
"We have known for ages they were doing that (holding discussions with a third party regarding a potential commercial and strategic relationship)," Johnson said. "Friday morning, the company formally reiterated that because of the regulators. But I don't believe there is any deal imminent."
The stock price jumped about 50 cents early in the day Friday, but the bidding settled down and eventually closed up only one cent to $7.35.
New Flyer has been biding its time until the U.S. economy strengthens and municipalities can get back to replacing their aging transit bus fleets.
The company has been forced to lay off workers, but it's also improving efficiencies and developing its growing aftermarket business.
Ron Koslowsky, the Manitoba vice-president of the Canadian Manufacturers and Exporters, said: "From what we can tell, everything New Flyer has been doing is the kind of effort that leads to a better organization and a more effective company, positioning themselves for the future."
Last summer, New Flyer started the process of converting to a common-share corporation from its complex income deposit securities (IDS) structure.
Among other things, that means annual dividends will be cut in half by this August -- from $1.17 to $0.56 -- but it will free cash for the company to pursue capital investments and potential partnerships and acquisitions.
On Friday, Soubry said the company has been saying for some time that the former structure, which required a high cash payout, did not support growth and diversification.
"Basically, all the cash that came in we were giving out and we couldn't reinvest, we couldn't acquire, we couldn't diversify because we didn't have any available cash," Soubry said.
The company expects to complete the conversion this August, when the last of the IDS units will be purchased.
Republished from the Winnipeg Free Press print edition February 4, 2012 B4
More Business
- Back to Top
- Return to Business
More Business
(1 of 19 articles for today)
Bernanke says computer revolution likely to provide various future gains to economic growth
2:56 PM 0
Poll
Most Popular Business
- Mounties say crooks passing fake polymer bank notes in British Columbia
- Ex-'Pegger seeks to grow local businesses
- Bridging the gap
- Gen X, young boomers up against retirement wall
- Buyer beware in online auto sales: experts
- Weekend of spending expected
- Toronto, Wall Street surge higher amid positive U.S. data, consumer sentiment
- The ready-made solution evolution
- In blurring of online courses, traditional, Georgia Tech to offer full open online master's
- Manitoba, P.E.I. tied for highest inflation in April
- Transcona transformation
- Mounties say crooks passing fake polymer bank notes in British Columbia
- Holiday pump jump debated
- Driving downtown development
- Winnipeg's got the REIT stuff
- McDonald's adding 3 new Quarter Pounders as it phases out third-pound Angus burgers
- Flight attendants union calls $50 million Air Canada cuts premature
- 3 Ford owners sue in federal court, saying EcoBoost engine is defective
- CEO, execs terminated at TCIG
- Emergency manager reveals Detroit is nearly broke; city may have no choice except bankruptcy
- Target opens its first Manitoba stores Tuesday
- New structure to be king of downtown?
- Transcona transformation
- Target opens Manitoba stores
- Mounties say crooks passing fake polymer bank notes in British Columbia
- Raising the rent is a good sign
- City to get a touch of glass
- Canad Inns property has personal meaning for owner
- Holiday pump jump debated
- Border-fee idea doesn't fly
- Bridging the gap
- Ex-'Pegger seeks to grow local businesses
- Late deal in workplace sex-harassment case
- Few crossovers score well in front crashes: report
- Tougher food-safety rules in the works: Agriculture Minister Gerry Ritz
- Give yourself permission to relax
- Buyer beware in online auto sales: experts
- Transcona transformation
- Winnipeg's got the REIT stuff
- CEO, execs terminated at TCIG
- Diversification spurs Exchange Income's growth
- Driving downtown development
- Late deal in workplace sex-harassment case
- There are lots of I's in 'team'
- City to get a touch of glass
- Bridging the gap
- Flight attendants union calls $50 million Air Canada cuts premature
- Transcona transformation
- MacDon on the block?
- New structure to be king of downtown?
- CEO, execs terminated at TCIG
- Target opens its first Manitoba stores Tuesday
- Canad Inns property has personal meaning for owner
- Winnipeg's got the REIT stuff
- Older and jobless? Resource on hand
- Carney says touching Canadian deposits "hard to fathom" in a new bail-in scheme
- Winnipeg Boeing plant set to expand
Ads by Google
You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.
Have Your Say
New to commenting? Check out our Frequently Asked Questions.
The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.