Feb 13, 2020
The Daily Chase: Bombardier cuts ties with former crown jewel; virus cases spike
By Noah Zivitz
Quebec, Airbus raise stakes in A220 as Bombardier exits former crown jewel
VIDEO SIGN OUT
Bombardier has cut ties with its former crown jewel, announcing today it’s exiting the A220 partnership by divvying up its stake between Airbus and Quebec, the joint-venture’s other partners. Bombardier will pocket US$591 million in the process and avoid hefty funding requirements, which CEO Alain Bellemare touts as “[supporting] our efforts to address our capital structure.” And the company might not be done on that front, with another wave of reports that Alstom could be prepping an offer for Bombardier’s rail unit. The business jet and train maker isn’t dousing the speculation, reiterating today it’s “actively pursuing options that would allow it to accelerate deleveraging.” Today we’ll assess how it came to this for the once-mighty transportation company and what its best options might be to manage a still daunting debt load. Separately, this morning’s financial results were pretty much in line with the preliminary numbers released last month, while forecasts for this year include positive free cash flow and more than US$15 billion in revenue (analysts expecting US$17.3B).
CORONAVIRUS CASES SPIKE
Global stocks are coming under pressure today after the number of confirmed coronavirus cases surged to more than 60,000 overnight as a result of new methodology for tracking the respiratory illness in the epicenter of Hubei, China. Meanwhile, deaths pinned on the illness are nearing 1,400.
EARNINGS PARADE
Lots of names on our radar. Among them: TC Energy reported adjusted fourth-quarter profit in line with estimates, said it will raise its dividend eight per cent, and gave the go-ahead for $1.3 billion in expansion projects. Manulife Financial raised its dividend late yesterday while reporting a 10 per cent gain in core fourth-quarter earnings. We’ll be on the lookout for any anecdotal commentary during this morning’s conference call on how the lifeco’s Asia unit is weathering protests in Hong Kong and the coronavirus outbreak. Telus announced a two-for-one stock split while disclosing wireless subscriber growth slowed in the fourth quarter as the churn rate rose. Aurora Cannabis interim CEO Michael Singer today said achieving profitability is the pot producer’s “singular near-term focus” while releasing quarterly results that were essentially on par with the preliminary Feb. 6 release.
BLOCKADE WATCH
We’ll connect with Annie Bergeron-Oliver from CTV News this morning in Belleville, Ont. where she’s reporting on the ongoing blockade that’s interrupting passenger and freight rail service. If you missed it, check out Tara’s conversation with Cenovus CEO Alex Pourbaix, who wasn’t mincing words on the protests tied to the Coastal GasLink pipeline in B.C.: https://www.bnnbloomberg.ca/gaslink-protests-are-ridiculous-behaviour-cenovus-ceo-1.1389306
OTHER NOTABLE STORIES
-Alimentation Couche-Tard has bumped up its takeover offer for Australian gas station and convenience store operator Caltex to A$35.25/share from A$34.50, and is calling it the “best and final” offer unless it faces a competing bidder.
-Tesla shares are slipping in pre-market trading after announcing plans to raise US$2 billion in a stock sale.
-Sign of the times for the newspaper industry: McClatchy announced today it’s filing for Chapter 11 bankruptcy protection
-Barclays disclosed today that U.K. regulators are probing CEO Jes Staley’s historical relationship with Jeffrey Epstein. Barclays says Staley “retains the full confidence of the board.”
NOTABLE RELEASES/EVENTS
-Notable earnings: Bombardier, Aurora Cannabis, TC Energy, Brookfield Asset Management, Fairfax Financial, Canadian Tire, Agnico Eagle Mines, Precision Drilling, Fortis, Constellation Software, WildBrain, PepsiCo, Kraft Heinz, Mattel, Nvidia
-Notable data: U.S. CPI
-9:00 a.m. ET: Parliamentary Budget Officer releases report “Economic and Fiscal Monitor – February 2020”
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
