“You cannot pick up a turd by the clean end.”
Letko Brosseau Intends to Vote AGAINST Encana’s Proposed Exit from Canada Press Release by Letko, Brosseau & Associates Inc., Nov 17, 2019
Montreal, Quebec, November 17, 2019 – Letko, Brosseau & Associates Inc. (“Letko Brosseau”), which exercises control or direction over approximately 4.0% of the outstanding shares of Encana Corporation (“Encana” or the “Company”), will vote
against Encana’s proposed exit from Canada to the U.S. Any emigration by Encana would cause its removal from the S&P TSX, and would require investors holding through indexed
Canadian funds or with Canadian-only investment policies to sell Encana shares.
Those sales would compound Encana’s recent share price performance, which has seen a dramatic decline of almost 70% since September 30, 2018.
Encana shares currently trade at approximately 2x 2019 cash flow and 1.7x our estimate of 2020 cash flow, well below that of its peers. Encana’s proposal would force share sales for investors at a particularly inopportune time, resulting in major losses.
The Company argues that new U.S. index fund investors would replace Canadian shareholders. That expectation is at best speculative, and is outweighed by the certainty of forced sales by, and significant losses for, Canadian investors, many of which are longstanding and loyal investors in the Company and its predecessors.
The proposed move is contrary to Encana’s best interests, and reflects a profound absence of concern for the protection and enhancement of shareholder value. Further, Encana did not take or even appear to consider any steps to mitigate the adverse consequences to the Company or its Canadian investors.
[It’s time Encana investors feel what it’s like to be frac’d by Encana]
For these reasons, Letko Brosseau strongly disagrees with this decision and will vote against this proposal.
Letko Brosseau is a Canadian independent investment manager founded in 1987. The firm manages approximately $27 billion in assets for institutional investors and private clients.
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
Peter Letko Daniel Brosseau
(514) 499-1200 (514) 499-1200
Encana shareholder to vote against proposal to exit Canada by Kevin Orland, Bloomberg, Nov 19, 2019, Calgary Herald
One of the largest investors in Encana Corp. said it will vote against the Canadian oil producer’s plan to move its headquarters from Calgary to the U.S.
Letko, Brosseau & Associates Inc., which has a stake of about four per cent, said Tuesday the proposal would force investors holding Encana shares through indexed Canadian funds or via Canadian-only investment policies to sell the stock. It also questioned Encana’s argument that new U.S. index fund investors would replace Canadian shareholders.
Representatives of Encana didn’t immediately return messages seeking a response to Letko Brosseau.
Encana’s plan to move south of the border and rename itself Ovintiv Inc., announced last month, ratcheted up the gloom enveloping the Canadian oil industry and heightened anxieties about losing major domestic companies. Montreal-based Letko Brosseau’s attempt to keep Encana in Canada may act as a warning shot to other companies considering pulling up stakes.
Letko Brosseau is so far the only investor to publicly oppose Encana’s plan, but its strongly worded statement may encourage others to break cover. It said Encana’s effort to re-domicile “reflects a profound absence of concern for the protection and enhancement of shareholder value.”
Encana’s investors have reason to be grumpy with the stock’s performance. The shares are down 47 per cent over the past 12 months, compared with the little-changed performance of the S&P/TSX energy index.
One of Letko Brosseau’s arguments is that the timing of Encana’s move would force some investors to sell the shares at a steep loss. [Trump gonna buy up Ovarytit’s dregs?]
The shares had little reaction to Letko Brosseau’s statement. Encana was down 3.6 per cent at C$5.30 as of 1:59 p.m. in Toronto trading, three cents higher than when the firm’s statement was released.
Encana investor blasts ‘discriminatory’ plan to flee Canada by Kevin Orland, Bloomberg, November 19, 2019, Calgary Herald
One of the largest Encana Corp. shareholders says the oil and natural gas producer’s plan to move to the U.S. is “highly discriminatory” against Canadian investors.
Letko, Brosseau & Associates Inc., which has a stake of about 4 per cent, will vote against Encana’s plan to relocate to the U.S., the investor said Tuesday in a statement. The Montreal-based firm said the move would force investors holding the shares through indexed Canadian funds or Canadian-only investment policies to sell the stock, likely at a loss given where the shares are now trading.
“This is an example of very poor corporate governance,” co-founder Peter Letko said in an interview. “The company is openly discriminating against certain types of shareholders.”
Encana’s announcement of the planned U.S. move last month ratcheted up the gloom enveloping the Canadian oil industry and heightened anxieties about losing major domestic companies. Letko Brosseau is so far the only investor to publicly oppose Encana’s plan, but its strongly worded statement may encourage others to break cover.
The attempt to keep Encana in Canada may act as a warning shot to other companies considering pulling up stakes.
Over 70 per cent of Encana’s shareholders are in the U.S., while 21 per cent are in Canada, according to data compiled by Bloomberg. [Hello! Mr. Apparently Mega Biased Steve Allen! Better get demanding the accounting books from massively foreign-funded Encana before the company vanishes inside an American vagina.]
“We do not believe that our Canadian investors will be forced to sell beyond the Canadian indices,” Encana said in a statement, adding it was disappointed by Letko’s remarks. “We want to expose our company and all its stockholders to increasingly larger pools of investment in U.S. index funds and passively managed accounts.” [More evidence for Mr. Allen to get investigating Encana, pronto!]
The oil producer reiterated its expectation that the move will create $1 billion of additional demand for its shares.
Encana didn’t consult Letko Brosseau, the driller’s fourth-largest shareholder, before announcing the plan. While Letko declined to say what else his firm may do to oppose the move, he characterized Tuesday’s statement as a “first step.”
Encana’s plan requires the approval of two-thirds of the company’s shareholders.
The move also was seen as the culmination of a long-term strategy by chief executive Doug Suttles, a Texan, to shift the company’s focus to the south.
After taking the reins in 2013, Suttles soon set about selling Canadian assets and building a major position in the U.S. through acquisitions. Suttles himself has already left Canada, moving in March of last year to Denver, where the company’s new headquarters will be located.
Letko says Encana’s explanation for the move was light on any strategic, business or tax advantages the company may garner from the relocation.
“It’s clear that wasn’t very much on their minds,” Letko said. “What might have been more on their minds was a short bike ride for their president to go to the office.”
Encana’s investors have reason to be grumpy with the stock’s performance. The shares are down 48 per cent over the past 12 months, compared with the little-changed performance of the S&P/TSX energy index. One of Letko Brosseau’s arguments is that the timing of Encana’s move would force some investors to sell the shares at a steep loss.
Encana shares fell 4.4% to $5.26 in Toronto on Tuesday.
Refer also to:
“Their logo looks like investors fleeing a frac hole.”
Gwyn Morgan whines over the top? Blames Canada for Encana slinking off with Ovarytits (aka Ovintiv) to the USA. Why does Morgan live here if he hates it so much? Too many $Millions in freebies? Is Gwyn whining so much because he too will be forced to sell his Encana shares at a great loss?
Encana fleeing Canada in Scheer desperation? Shares drop 9.2%! Illegal aquifer-frac’er, caprock buster, poisoning bully of families and briber/divider of communities running to USA, changing its spots to Ovintiv Inc. Erectile Dysfunction drug or cross between Ovaltine in vintage container and a vagina?