Chemtrade Logistics (Symbol-CHE.UN)

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barrister
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Chemtrade Logistics (Symbol-CHE.UN)

Post by barrister »

Does anyone have any idea of why this trust has experienced such a sharp decline in the last week or so? I have not seen anything negative being reported. Thank you
westcoastfella
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by westcoastfella »

Looks like this company doesn't get a lot of interest in FWF, nothing since 2007.

Last Friday, Chemtrade finally purchased Canexus. After a drawn out hostile takeover bid that seemed to start in the summer, they have come to a (seemingly) amicable agreement, with a higher price.

I've been a shareholder in Chemtrade for the past 3 years, and have been happy with them - its had some growth over that time, but mostly has been a very steady income producer. For the sake of growth I'm happy to see this deal, although I admittedly don't follow Canexus very closely so I don't know if this is a good deal or a bad deal. Anyone have any thoughts?

I'm also a holder of some Canexus convertible debentures, that I bought in the fall, about a week before Chemtrade's pursuit of Canexus was made public. No word yet on what CHE will do with them, although I expect them to redeem as early as possible (have to check what that date is). I had bought them at $90-ish, so happy with the gain but would have liked to enjoy the income until 2020...
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by 2 yen »

westcoastfella wrote:Looks like this company doesn't get a lot of interest in FWF, nothing since 2007.

Last Friday, Chemtrade finally purchased Canexus. After a drawn out hostile takeover bid that seemed to start in the summer, they have come to a (seemingly) amicable agreement, with a higher price.

I've been a shareholder in Chemtrade for the past 3 years, and have been happy with them - its had some growth over that time, but mostly has been a very steady income producer. For the sake of growth I'm happy to see this deal, although I admittedly don't follow Canexus very closely so I don't know if this is a good deal or a bad deal. Anyone have any thoughts?

I'm also a holder of some Canexus convertible debentures, that I bought in the fall, about a week before Chemtrade's pursuit of Canexus was made public. No word yet on what CHE will do with them, although I expect them to redeem as early as possible (have to check what that date is). I had bought them at $90-ish, so happy with the gain but would have liked to enjoy the income until 2020...
CHE did pop a little on the Canexus news. My initial observation is that this deal helps them seal up more market share (obviously), but not at all sure how it will impact the distribution - which has not changed in years. CHE seems to be a very boring, consistent dividend payer. I recently bought it, but might not suggest it for a young person starting out as the history of distribution growth is weak. I am viewing it as more bond-like, not as a dividend growth vehicle.

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Descartes
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by Descartes »

I agree that it's bond-like.
I've owned Chemtrade for about 4 years now. I think it has grown only 4% or so a year over that time period but with the dividend that's good enough.

I bought it for income and I feel the management is pretty shrewd ..unlike the management at Canexus who nearly killed that company with an loading-oil-by-rail venture that went into huge cost overruns and was eventually sold at a loss.

What is left at Canexus is profitable (although little growth prospects) and the acquisition is expected to be accretive for Chemtrade - this is why the price jumped with the announcement last week.
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by westcoastfella »

thanks for the Canexus insights, good to know that CHE is not buying a lemon. I too have been happy with the steady income, its probably the most bond-like non-bond in my collection, and I'm happy to keep it so long as they're doing the right things.
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by Transformer »

I hold some Canexus debentures. Does anyone know how these will be treated in the takeover. I can find no info on Sedar.
westcoastfella
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by westcoastfella »

Transformer wrote:I hold some Canexus debentures. Does anyone know how these will be treated in the takeover. I can find no info on Sedar.
I'm waiting for the same news, holding a pile of the 2020 issue.

Past experience tells me that they'll be redeemed at the time the purchase closes, but at what price still remains to be seen.
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by thedude99 »

Does anyone understand this thing? US has been booming and they have many locations down there. Surely demand for chemicals is way up yet they have flat revenue and declining earnings. I know they are still digesting the big acquisition they made. Speaking of which this whole industry seems pretty quiet - you don't hear much about it. I guess Dow and Nova dominate it?
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by AltaRed »

Feedstock prices is going up and margins will be squeezed. Feedstock comes from both the upstream gas industry and refining industry. I would hace to look at the specific feedstock and end product component to to be more certain. I know when I worked for a full integrated oil company, the Chemical side struggled more often than not to get high single digit ROE, never mind double digit, over the long term.
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thedude
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by thedude »

Divy cut in half today. I actually have owned abit of this for 10 years or something like that...always too small of a position to take up alot of my brainspace really. I'm unclear how their CEO can remain employed with disastrous acquisitions and resulting lawsuits during a decade long bull market when their stock did nothing but tread water
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Re: Chemtrade Logistics (Symbol-CHE.UN)

Post by Camjournal »

Yeah, I'm with thedude on this. I've owned CHE for at least 7 years and it's been a good & steady dividend payer even through some recent troubles and they have stuck by their dividend until this last straw. This company fits nicely into my portfolio but mainly I like that they have backed up what they say about maintaining the dividend - by actually doing so. But they have made what appear to be some bonehead moves, such as the General Chemical acquisition which came with a significant Department of Justice anti-competition ruling for which they massively underestimated the costs going fwd. The CEO can wear this but surely someone in the organization saw it coming? Mess with the DoJ at your peril! I still think they have as good a future as most other companies and will bump the dividend back up when they can.

I need the faith as I've got pretty much a whole position in CHE, which for me is about 5% (ACB) although I long ago resigned myself to the possibility of a dividend cut.
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