Martinrea plunges after revealing more problems lower guidance

Shares of auto parts maker Martinrea International Inc. (TSX:MRE) tumbled 20 per cent as market players reacted to the company’s warning that it will likely fall short of its financial guidance.“We believe that Martinrea will be valued at a discount to the other Canadian auto parts companies,” BMO Capital Markets analyst Peter Sklar wrote in a note to clients.Sklar downgraded Martinrea’s stock to “underperform” from “market perform” and cut his price target on the stock to $9 from $12.50.The stock was down 20 per cent or $1.92 at $7.50 late Thursday afternoon, with more than five million shares traded, making Martinrea the most active issue on the Toronto Stock Exchange.Last month, the company said it expected to earn a profit in the range of 23 cents to 28 cents per share. Martinrea did not say what it now expects to earn for the quarter but said it will likely be lower than that.The company said Wednesday after markets closed that problems at its Hopkinsville factory in Kentucky, including equipment failures, have meant increased costs and could result in a write down of assets at the plant.In addition, the company warned that one of its Canadian factories has been overstating its financial results for several years. The company said a review was ongoing, but estimated its earnings may have been overstated by a total of $10 million to $18 million during 2005 to 2012.Martinrea also said some of the legal costs related to a lawsuit filed against the company by Nat Rea, a former executive and major shareholder in the company, are not covered by insurance and were not included in the guidance.Rea filed a lawsuit in September accused directors and senior executives at the company of breaching their fiduciary duties to in connection with a series of related party transactions involving certain suppliers and customers. The allegations have not been proven in court.Martinrea, which said the claims are without merit, said a special committee of independent directors Scott Balfour and Fred Olson has been assigned to oversee the case. The special committee is authorized to supervise the investigation of the allegations and make recommendations to the board as to any required steps.Rea parted ways with the company earlier this year when he stepped down as vice-chairman and a director of the company. As part of a separation agreement, he was paid $5.2 million.Martinrea said Rea first raised concerns with the company in 2011 while he was still an executive and director. The company said the issues were reviewed by the head of the audit committee, who presented his findings to the board.At the time, Martinrea said Rea “indicated in writing that all his concerns had been addressed” and the board determined no further action was required.“After consecutive record quarters from a financial and performance perspective, we are dealing with some legal and operational issues,” Martinrea executive chairman Rob Wildeboer said in a statement.“We have faced many challenges over the years as we grew this company from scratch, and have always met every challenge head on with conviction and a desire to do the right thing for all our stakeholders.”Sklar noted the problems at Hopkinsville follow problems at Martinrea’s operations in Shelbyville, Ky., last year.“Our concern is that there may be a pattern of operational issues and equipment failures out of the norm,” he wrote in a note to clients.Sklar also raised concerns that the costs related to the Rea lawsuit are likely to continue for some time.“As we have indicated previously, in respect of the litigation initiated by Nat Rea, we are unable to assess the relative merits of each party’s assertions; and, we believe there may be a considerable period of time until these allegations are resolved,” he wrote.“In the interim, we believe the uncertainty will weigh on Martinrea’s valuation, and we note that the public release of legal documents pertaining to the case can result in a significant amount of volatility in the stock price.” read more

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Brock student awarded prestigious exchange opportunity in US

Parker Deabreu’s passion for environmental economics is fuelling her pursuit of a career in the oil and energy sector.In Jan. 2020, the fourth-year Economics student will be attending the University of Maine on exchange to study their world-renowned environmental economics courses.Deabreu is the 2019-20 Killam Fellowship recipient, a new program Brock University announced last year through a partnership with Fullbright Canada. The program gives Brock students the opportunity to study at a handful of post-secondary institutions across the United States.Along with having access to programming and awards, Deabreu will also receive $5,000 USD to alleviate the financial stress of studying south of the border. “Killiam is a very prestigious program,” said Debreu. “It’s a big deal to be a part of this.”Deabreu is no stranger to studying abroad. Last fall, she went on exchange to the University of the West Indies (UWI) in Trinidad and Tobago, where she enrolled in environmental economics courses and immersed herself in local culture and regional hotspots.Admittedly, she was also excited to trade in Canada’s colder months for the tropical climate.“Exchange is a nice thing to have on your resumé, but it turned out to be so much more than what you think going into it,” said Deabreu.She was able to develop meaningful friendships with local and international UWI students and even convinced one to pursue a semester-long exchange at Brock.Deabreu says one of the most surprising things about embarking on an exchange was how affordable it can be.“If you budget properly, it’s affordable and costs the same amount you’d be spending in a regular school year here.”She’s hoping that her time at the University of Maine will provide her with experience and connections in the American energy sector, as well as a broader sense of the connection between Canada and the U.S.Brock students interested in applying for the Killam Fellowship program in 2020-21 are encouraged to submit an application online through Brock’s International Mobility office by Sunday, Dec. 1, 2019. Deabreu’s advice for students considering studying abroad is to be objective. “You need to see what you value the most in a school, a community and a culture,” said Deabreu.Interested students can also attend Brock’s International Mobility Fair Wednesday, Oct. 9. The event provides students with the opportunity to learn about the various global experiences available through Brock’s partner institutions. One lucky attendee will also have the chance to win a $500 Air Canada gift card to help with the costs of travel. For more details, please visit ExperienceBUFor any questions or assistance with applying, please contact Brock’s International Mobility Office at intlmobility@brocku.ca read more

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