Kherson wrote: Thorton51 wrote: Was this the reason why the stock took a hit on 15th. Earnings didn't warrant such a big hit. Do you think someone acted on insider info? Nah!
TORONTO, Nov. 20, 2017 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE.UN) announced today that a recurrence of an operating issue has resulted in an unplanned interruption of production at its North Vancouverchlor-alkali plant. The plant is an asset of Chemtrade Electrochem, formerly Canexus Corporation ("Canexus"). The issue was discovered on November 12, 2017 and Chemtrade expects the plant to be offline for approximately two weeks.
Prior to this issue, during 2017, the plant had been setting production records. This unscheduled shutdown is the result of an issue known at the time the plant was acquired as part of the purchase of Canexus and is scheduled to be permanently fixed in April, 2018 during a planned turn around. Once the plant is operational after the current shutdown, Chemtrade expects the plant to resume its pre-incident production run rates until the planned April shutdown.
The plant had experienced a similar problem in November 2016 resulting in an unscheduled shutdown to temporarily fix the issue. Once Chemtrade assumed ownership of this plant, it determined the permanent fix required and ordered the necessary long lead time materials. These materials are scheduled to arrive in December and then must be prepared for installation in April 2018.
As a result of the outage, Chemtrade has declared force majeure for the supply of caustic soda, chlorine and hydrochloric acid. Chemtrade estimates the EBITDA impact of this incident will range between $7 million and $8 million, the majority of which will be realized in Q4 2017.
This is a very interesting NR by Chemtrade Electrochem Inc, concerning their North Vancouver facility and the initial shut-down back in November, 2016. This NR clearly states that the shut-down in November, 2016 was an unplanned shut-down to temporary fix the problem!
But back on March 28th, 2017 in the year ending 2016 MD&A, Chemtrade clearly states the following concerning their newly acquired North Vancouver facility;
1) North America Chlor-alkali segement - Cash Operating profit for the three months ending December 31, 2017 decreased by $2.6 million mainly due to a planned bi-annual maintenance shut-down at the North Vancouver facility.
2) Capital Expenditures for the three months ending December 31, 2016 - The increase in maintenance capital expenditures is the result of certain maintenance capital projects at various production facilities, including the planned bi-annual maintenace shut-down at the North Vancouver facility...
I could not find any information in the 2016 MD&A report concerning an unscheduled November shut-down at the North Vancouver facility.
So, the first question is, were there actually two shut-downs at the North Vancouver facility in November 2016?
Second, how was the unscheduled shut-down referred to in the recent NR expensed in the 2016 financials, as an operating expense or a capital expense?
The second question now becomes this, how is this discrepancy important if there is a discrepancy, to the quarterly and year end financials. If you recall, PennWest got into trouble with the SEC for incorrectly reporting Operating Expenses as Capital Expenses, which unjustly increased PennWest's bottom line. If you also recall, the SEC found fault with this and Obsidian Energy (PennWest) ended up paying a $8.5 million dollar settlement to the SEC! But what is most telling with the Obsidian Energy settlement is that the SEC lawsuit against the former PennWest employees is still ongoing!
I would like to thank my good friend Truthteller for initially pointing out the possible discreptancies in Chemtrade's 2016 MD&A and the November 20th news release!
Kherson