ECN Capital Corp T.ECN.DB.B

RBC

[retiredcf]

Certainly an interesting development. GLTA

March 7, 2023

ECN Capital Corp
Announces strategic alternatives review

TSX: ECN | CAD 3.10 | Sector Perform | Price Target CAD 4.00

Sentiment: Neutral

Summary: ECN announced it initiated a review of strategic alternatives for its current businesses in response to interest it has received. Some options ECN is considering include strategic funding and capital relationships, among others. Further, ECN has retained external financial advisors and does not plan on providing further status updates on the process unless there are material developments.

In connection with the strategic alternatives review, ECN announced it will postpone its Investor Day, which was scheduled for Wednesday, March 8, 2023 (tomorrow), and that the company will release its Q4/22 results on Wednesday, March 22, 2023 after market close.

Our take: Today's announcement was unexpected, but not entirely surprising given the significant decline in the share price since last summer. We think the shares are likely to react positively to today's announcement, but given the uncertainty regarding the outcome of the review, we maintain our Sector Perform rating.

[retiredcf]

1.4 million traded in the first 45 minutes. Safe to say that this announcement has attracted investor's attention. GLTA

[Lawyerup]

Yeah for sure.  It looks like some external entity is looking to present an offer for a buyout.  I am not sure why anyone would be selling at this level.  We are close to 6M shares traded so far this morning.  Really interesting for sure.  All the best Charlie.

[Blueswin]

I agree with your assumption that it sounds like someone might make an offer for a buy out. Although it does not say it expliciately it sure sounds like it from their press release - "in response to interest that has been received by the Company, ECN will evaluate the full range of alternatives to determine the best path forward."  Any guesses what you would think would be fair

[Lawyerup]

I would think around $5 to $6 share this would include a premium on the NAV of the company.  I think the release was purposedly vague in the chance it might encourage some interest from other companies to step up and look into taking over ECN.  I imagine it will take a few months before we get a clearer picture.

[Smallcap123123]

I would say fair value on the shares is 6.00 +/- .50. 14x operating income would be more than fair. keep in mind post Kessler, Hudson was buying shares at 5.86 and 5.40... he wasn't doing this with a NAV at 5-5.50. A premium to NAV would be in the 6.50 range. I agree with you that they were purposely vague. They don't exactly want to say that they are exploring a sale when they, at