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TSX Venture Exchange Stock Maintenance Bulletins

·13 min read

VANCOUVER, BC, May 26, 2021 /CNW/ -

TSX VENTURE COMPANIES

COLLECTIVE MINING LTD. ("CNL")
[formerly POCML 5 Inc. ("PCML.P")]
BULLETIN TYPE: Qualifying Transaction-Completed/New Symbol, Resume Trading, Private Placement-
Non-Brokered, Name Change and Consolidation
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Qualifying Transaction - Completed

TSX Venture Exchange has accepted for filing the Company's Qualifying Transaction ("QT") described in its Filing Statement dated May 12, 2021. As a result, at the opening on Friday, May 28, 2021, the Company will no longer be considered as a Capital Pool Company.

The QT consists of the acquisition of all the issued and outstanding securities of Collective Mining Inc., ("Collective"), by way of share exchange, in consideration of the issuance of 22,117,465 common shares at a deemed issue price of $1.00 per share.

A total of 18,531,166 common shares, 700,000 resulting issuer options and 187,500 common share purchase warrants are escrowed pursuant to an Exchange Tier 2 Value Escrow Agreement, and a total of 2,252,500 common shares and 450,000 resulting issuer options are subject Seed Share Resale Restrictions ("SSRR") and are subject to SSRR hold periods.

The Company is classified as a "Gold and silver ore mining" Issuer (NAICS Number: 212220).

For further information, please refer to the Company's Filing Statement dated May 12, 2021, available on SEDAR.

Resume Trading

Further to TSX Venture Exchange's Bulletin dated November 30, 2020, trading in the securities of the Company will resume at the opening on Friday, May 28, 2021.

Effective at the opening on Friday, May 28, 2021, the trading symbol for the Company will change from "PCML.P" to "CNL".

Private Placement-Non-Brokered

TSX Venture Exchange has accepted for filing the documentation with respect to a Non-Brokered Private Placement. This Private Placement consisted of the issuance of subscription receipts, which were exchanged into common shares upon closing of the Qualifying Transaction, as follows:

Number of Shares:

15,000,000 common shares post-consolidation


Purchase Price:

$1.00 per common share post-consolidation


Warrants:

7,500,000 warrants to purchase 7,500,000 common shares post-consolidation


Warrant Exercise Price:

$2.00 per common share post-consolidation for 36 months post-closing, including acceleration clause


Number of Placees:

70

Insider / Pro Group Participation:

Name

Insider=Y /

ProGroup=P

Number of
Shares on a
post-
consolidation
basis

2180447 Ontario Inc. (David D'Onofrio)

Y

200,000

1999609 Ontario Inc. (Adam Parsons)

Y

20,000

Ari Sussman

Y

100,000

Paul Begin

Y

50,000

Kenneth Thomas

Y

30,000

2599584 Ontario Inc. (Pasquale DiCapo)

Y

2,000,000

Pasquale DiCapo

Y

950,000

Aggregate Pro-Group Involvement

(2 Placees)

P

175,000

Finder's Fee:

Finders collectively received 534,500 common shares and 267,250 warrants to purchase 267,250 common shares exercisable at a price of $2.00 per common share post-consolidation for a period of 36 months post-closing, including acceleration clause

The Company confirmed the closing of the Private Placement via a press releases dated February 26, 2021 and May 20, 2021.

Name Change and Consolidation

Pursuant to a resolution by the shareholders dated April 9, 2021, the Company has consolidated its capital on a 4 old shares for 1 new share basis. The name of the Company has also been changed from "POCML 5 Inc." to "Collective Mining Ltd.".

Effective at the opening of business on Friday, May 28, 2021, the common shares of "Collective Mining Ltd." will commence trading on TSX Venture Exchange, and the common shares of "POCML 5 Inc." will be delisted.

Post-Consolidation and
Post-Transactional

Capitalization:

Unlimited number of common shares with no par value of which 40,436,965 common shares are issued and outstanding on a post-consolidation basis.


Escrow:

20,531,166 common shares, 187,500 common share purchase warrants and 700,000 resulting issuer options, of which 2,053,117 shares, 18,750 common share purchase warrants and 70,000 resulting issuer options are released at the date of this bulletin on a post-consolidation basis.


Transfer Agent:

TSX Trust Company (Toronto)


Trading Symbol:

CNL

(NEW)


CUSIP Number:

19425C100

(NEW)

TSX Venture Exchange has been advised that the above transactions have been completed.

Company Contact:

Paul Begin, Chief Financial Officer and Corporate Secretary

Company Address:

82 Richmond St. E, Toronto, ON M5C 1P1

Company Phone Number:

(416) 451-2727

Company Fax Number:

N/A

E-mail Address:

info@collectivemining.com

Web site:

www.collectivemining.com

____________________________________

SAMURAI CAPITAL CORP. ("SSS.P")
BULLETIN TYPE: New Listing-CPC-Shares, Halt, Correction
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Further to the bulletin dated May 25, 2021, the CUSIP number has been corrected as shown below. All other information is unchanged:

Commence Date:

At the opening Thursday, May 27, 2021, the common shares will be listed and immediately halted from trading on TSX Venture Exchange.



The closing of the public offering is scheduled to occur on Thursday, May 27, 2021. A further notice will be published upon the confirmation of closing and the trading halt will be lifted.


Corporate Jurisdiction:

British Columbia



Capitalization:

unlimited

common shares with no par value of which


4,400,000

common shares will be issued and outstanding on completion of the initial public offering

Escrowed Shares:

2,400,000

common shares





Transfer Agent:


TSX Trust Company

Trading Symbol:


SSS.P

CUSIP Number:


79607E 10 0

Agent:


Research Capital Corporation


Agent's Warrants:

200,000 non-transferable warrants. Each warrant to purchase one share at $0.10 per share for 24 months.

________________________________________

SKYLIGHT HEALTH GROUP INC. ("SHG")
BULLETIN TYPE: Consolidation
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Pursuant to a special resolution passed by shareholders on February 22, 2021, the Company has consolidated its capital on a (5) old for (1) new basis. The name of the Company has not been changed.

Effective at the opening, Friday, May 28, 2021, the common shares of Skylight Health Group Inc. will commence trading on TSX Venture Exchange on a consolidated basis. The Company is classified as an "All Other Out-Patient Care Centres" company.

Post - Consolidation

Capitalization:

Unlimited

shares with no par value of which


38,109,758

shares are issued and outstanding

Escrow

2,694,460

shares are subject to escrow


Transfer Agent:

Capital Transfer Agency

Trading Symbol:

SHG


(UNCHANGED)

CUSIP Number:

83086L205


(NEW)

________________________________________

21/05/26 - TSX Venture Exchange Bulletins

TSX VENTURE COMPANIES

ALLEGIANT GOLD LTD. ("AUAU")
BULLETIN TYPE: Resume Trading
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Effective at 6:30 a.m. PST, May 26, 2021, shares of the Company resumed trading, an announcement having been made.

________________________________________

ALSET CAPITAL INC. ("KSUM.H")
BULLETIN TYPE: Property-Asset or Share Disposition Agreement, Shares for Debt
BULLETIN DATE: May 26, 2021
NEX Company

Property-Asset or Share Disposition Agreement:

TSX Venture Exchange (the "Exchange") has accepted for filing documentation pertaining to the sale by Alset Capital Inc. (the "Company") of all of the issued and outstanding common shares of the Company's subsidiaries, Rosterbot Inc. ("Rosterbot"), ProSmart Sports Development Inc. ("ProSmart"), and DL Hockey Consulting Limited (collectively, the "Subsidiaries") pursuant to the terms of a share purchase agreement dated September 17, 2020, as amended, between the Company and 1255589 B.C. Ltd. (the "Purchaser").

As consideration for the disposition, pursuant to the terms of a debt assumption and settlement agreement dated May 17, 2021 (the "Debt Settlement Agreement") that included the Company, the Purchaser, the Subsidiaries, the Purchaser has, through Rosterbot and ProSmart, assumed $640,000 debt of the Company.

For further information please refer to the Company's news releases dated October 29, 2020, February 3, 2021 and May 21, 2021.

Shares for Debt:

TSX Venture Exchange has accepted for filing the Company's proposal to issue 323,232 shares at $0.165 per share to settle outstanding debt for $53,333.

Number of Creditors:

1 Creditor

The Company shall issue a news release when the shares are issued and the debt extinguished.

_______________________________________

CYMAT TECHNOLOGIES LTD. ("CYM")
BULLETIN TYPE: Private Placement - Non-Brokered
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Non-Brokered Private Placement announced on April 26, 2021:

Number of Shares:

7,719,723 common shares


Purchase Price:

$0.65 per common share


Warrants:

3,859,862 share purchase warrants to purchase 3,859,862 common shares


Warrant Exercise Price:

$0.90 for a twenty-four (24) month period.


Number of Placees:

33 Placees


Insider / Pro Group Participation:

Name

Insider=Y /
ProGroup=P

# of Shares

Jon Gill

Y

100,000

Martin Mazza

Y

50,000

Finder's Fee:

An aggregate of 770,000 advisory options payable to Eight Capital. Each advisory option entitles the holder to acquire one unit at a price of $0.65 per unit for a period of eighteen (18) months. The units issuable to the Finder have the same composition as the units issued pursuant to the offering.

Note that in certain circumstances the Exchange may later extend the expiry date of the warrants, if they are less than the maximum permitted term.

Pursuant to Corporate Finance Policy 4.1, Section 1.11(d), the Company has issued a news release dated May 4, 2021, announcing the closing of the private placement.

________________________________________

ECC VENTURES 2 CORP. ("ETWO.P")
BULLETIN TYPE: CPC-Filing Statement
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing the Company's CPC Filing Statement dated May 14, 2021, for the purpose of filing on SEDAR.

________________________________________

HEMOSTEMIX INC. ("HEM")
BULLETIN TYPE: Private Placement-Non-Brokered
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Non-Brokered Private Placement announced on April 9, 2021 and April 26, 2021:

Number of Shares:

$0.35 per share


Purchase Price:

$0.35 per share


Warrants:

1,257,234 share purchase warrants to purchase 1,257,234 shares.


Warrant Exercise Price:

$0.40 for a two-year period. The warrants are subject to an acceleration clause that if, on any 10 consecutive trading days occurring after four months and one day have elapsed following the closing date of the offering, the closing price of the common shares on the Exchange is greater than $0.48 per common share, the company may provide notice in writing to the holders of the warrants by issuance of a press release that the expiry date of the warrants will be accelerated to the 30th day after the date on which the company issues such press release.


Number of Placees:

11 Placees


Insider / Pro Group Participation:



Name

Insider=Y /
ProGroup=P

# of Units

Loran Swanberg

Y

500,000

Thomas Smeenk

Y

50,000




Finder's Fee:

$8,750.00 and 25,000 Units payable to PI Financial Corp.;


$7,515.76 and 21,474 Units payable to Fidelity Clearing Canada ULC; and


$9,816.80 and 28,048 Units payable to Stryker 11 Inc.


Each Unit is comprised of one common share and one common share purchase warrant exercisable at $0.40 for 12 months from closing date.

Pursuant to Corporate Finance Policy 4.1, Section 1.9(e), the Company issued a news release on May 10, 2021 announcing the closing of the private placement and setting out the expiry dates of the hold period(s).

________________________________________

LABRADOR GOLD CORP. ("LAB")
BULLETIN TYPE: Private Placement-Non-Brokered
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Non-Brokered Private Placement:

Number of Shares:

16,666,667 shares


Purchase Price:

$0.90 per share


Warrants:

8,333,333 share purchase warrants to purchase 8,333,333 shares


Warrants Exercise Price:

$1.05 for a two-year period


Number of Placees:

2 Placees


Insider / Pro Group Participation:

Name

Insider=Y /
ProGroup=P

# of Shares

2176423 Ontario Ltd.

Y

11,111,111

(Eric Sprott)


New Found Gold Corp.

Y

5,555,556

(Palisades Goldcorp Ltd. – Collin Kettell)

Pursuant to Corporate Finance Policy 4.1, Section 1.9(e), the Company has issued a news release dated May 19, 2021 announcing the closing of the private placement and setting out the expiry dates of the hold period(s).

________________________________________

LEGEND POWER SYSTEMS INC ("LPS")
BULLETIN TYPE: Halt
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Effective at 12:25 p.m. PST, May 25, 2021, trading in the shares of the Company was halted at the request of the Company, pending news; this regulatory halt is imposed by Investment Industry Regulatory Organization of Canada, the Market Regulator of the Exchange pursuant to the provisions of Section 10.9(1) of the Universal Market Integrity Rules.

________________________________________

LEGEND POWER SYSTEMS INC ("LPS")
BULLETIN TYPE: Resume Trading
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

Effective at 9:15 a.m. PST, May 26, 2021, shares of the Company resumed trading, an announcement having been made.

________________________________________

MARGARET LAKE DIAMONDS INC. ("DIA")
BULLETIN TYPE: Private Placement-Non-Brokered
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Non-Brokered Private Placement announced April 26, 2021, which relies upon the Notice to Issuers dated April 8, 2020, September 16, 2020 and December 15, 2020:

Number of Shares:

5,000,000 shares


Purchase Price:

$0.03 per share


Warrants

5,000,000 share purchase warrants to purchase 5,000,000 shares


Warrant Exercise Price

$0.08 for a two-year period


Number of Placees:

7 Placees


Insider / Pro Group Participation:

Name

Insider=Y /
ProGroup=P

# of Shares

George Kovalyov

Y

670,000


Patrick Butler

Y

500,000


Neil Foram

Y

500,000


James Wiesenberg

Y

700,000

Pursuant to Corporate Finance Policy 4.1, Section 1.9(e), the Company has issued a news release dated May 11, 2021 announcing the closing of the private placement and setting out the expiry dates of the hold periods. Note that in certain circumstances the Exchange may later extend the expiry date of the warrants, if they are less than the maximum permitted term.

________________________________________

SAINT JEAN CARBON INC. ("SJL")
BULLETIN TYPE: Private Placement-Non-Brokered
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing documentation with respect to a Non-Brokered Private Placement announced May 4, 2021:

Number of Shares:

7,000,000 common share units ("Unit"). Each Unit consists of one common share and one-half of one common share purchase warrant.



Purchase Price:

$0.125 per Unit


Warrants:

3,500,000 share purchase warrants to purchase 3,500,000 shares


Warrant Exercise Price:

$0.25 for a two-year period


Number of Placees:

17 Placees


Insider Participation:

Name

Insider=Y /
ProGroup=P

Number of Units




Aggregate Pro Group Involvement

[2 Placees]

P

320,000

Pursuant to Corporate Finance Policy 4.1, Section 1.9(e), the Company issued a news release dated May 25, 2021 announcing the closing of the private placement and setting out the expiry dates of the hold periods.

________________________________________

THERMA BRIGHT INC. ("THRM")
BULLETIN TYPE: Shares for Debt
BULLETIN DATE: May 26, 2021
TSX Venture Tier 2 Company

TSX Venture Exchange has accepted for filing the Company's proposal to issue 200,000 common shares at a deemed value of $0.50 per share and 100,000 warrants, with each warrant exercisable into one common share at $0.60 for a two (2) year period, to settle outstanding debt for $100,000.

Number of Creditors:

1 Creditor


Warrants:

100,000 share purchase warrants to purchase 100,000 shares


Warrant Exercise Price:

$0.60 for a two (2) year period

For further information, please refer to the Company's news release dated April 22, 2021. The Company shall issue a news release when the shares are issued and the debt extinguished.

________________________________________

SOURCE TSX Venture Exchange

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/May2021/27/c8006.html

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  • Pipelines Balked When ‘Blinking Red’ Hack Alert Went Off in 2012

    (Bloomberg) -- A decade ago, after hackers were caught infiltrating natural gas pipeline operations and an al-Qaeda video emerged calling for an “electronic jihad” on U.S. infrastructure, then-Senator Joseph Lieberman tried to sound the alarm.The system is “blinking red,” Lieberman warned his Senate colleagues during debate on the threat in 2012. “Privately owned and operated cyber infrastructure can well be, and probably some day will be, the target of an enemy attack.”Led by the Connecticut independent and one-time vice presidential candidate, lawmakers sought to require energy companies to strengthen computer security. But the effort withered under fierce lobbying by oil companies and other corporate interests that succeeded in killing the legislation. That left in place a system of voluntary guidelines that failed to stop last month’s ransomware attack on Colonial Pipeline Co., which paralyzed a major artery for fuel along the East Coast.“It’s really a lost opportunity,” said Lieberman, now senior counsel at Kasowitz Benson Torres LLP. “The attack on the Colonial Pipeline might not have happened if we passed the legislation.”Now, in response to the attack, the Department of Homeland Security is preparing to jettison the voluntary approach and impose cybersecurity requirements on pipelines, according to a person familiar with the plans who asked not to be identified before a formal announcement.That would be a defeat for oil companies and pipeline operators that for more than a decade have successfully fought off federal standards to thwart cyberattacks from legislation or regulatory agencies. Unlike power plants, U.S. pipelines are not required to follow any federal cybersecurity mandates, even though Homeland Security was given the authority to impose them when it was created in the wake of the Sept. 11, 2001 attacks.The Transportation Security Administration, the DHS agency in charge of protecting the nation’s pipelines, will issue a directive this week requiring pipeline companies to report cyber incidents, according to the person familiar with the plans. Additional requirements for safeguarding facilities and responding to attacks are set to be advanced in coming weeks, the Washington Post reported.“The Biden administration is taking further action to better secure our nation’s critical infrastructure,” DHS said in a statement on Tuesday. “We will release additional details in the days ahead.”Until now, the TSA had resisted using its authority to mandate cyberprotection measures.“My belief was we could get quicker and better security through working with the industry instead of regulating them because regulations set minimum security standards and industry in many cases was doing more than that,” said Jack Fox, who served as the agency’s manager of pipeline security before retiring in 2016.Lieberman’s bill would have imposed cybersecurity performance requirements on privately owned critical infrastructure -- and slap fines on companies that fell short. The rules would have been applied to more than pipelines: sectors where a hostile take-down of computer systems could lead to mass casualties, the collapse of financial markets or the disruption of energy and water supplies, were to be included.Even a watered-down version of the bill failed to overcome a Republican-led filibuster.Pipeline CompaniesFor Lieberman, the failure still stings.“We would sort of ask ourselves who is driving this aggressive opposition and the answer we were getting was the energy companies and the pipeline companies,” he said.Every major U.S. oil company -- including Exxon Mobil Corp., Chevron Corp. and ConocoPhillips -- lobbied on the legislation, alongside some refiners and at least one pipeline operator. Colonial didn’t lobby on the measure in 2012, according to disclosure forms it filed with Congress. However, groups it belonged to did, including the American Petroleum Institute, the Association of Oil Pipe Lines and the Chamber of Commerce -- a political titan that reported spending $103.9 million influencing government policies in 2012.The Chamber opposed the legislation at the time, calling it an overly broad, heavy-handed approach to regulation that threatened to create an “adversarial“ relationship between the government and private industry instead of fostering collaboration against cyberattacks. The group backed an alternative approach focused on greater sharing of threat information, a stance it continues to endorse today.“We support a public-private collaboration that strengthens our cybersecurity in all sectors, including pipelines, to benefit all Americans,” said Matthew Eggers, vice president of cybersecurity policy for the Chamber.Cybersecurity experts and government officials have cautioned for years about the consequences of a pipeline hack, including in 2019 when the Office of the Director of National Intelligence issued a report warning a cyberattack could disrupt a pipeline “for days to weeks.”Nevertheless, there was widespread business opposition to the Lieberman bill, with almost every affected industry, from financial services to communications, getting involved to warn the proposed cybersecurity mandates would insert the heavy hand of government into corporate affairs.But proponents warned that mandates were essential to ensure there were sufficient safeguards amid a barrage of ever-more sophisticated attacks on private companies running power plants, dams and other critical infrastructure.al-Qaeda VideoWeeks after the bill’s introduction, the Department of Homeland Security warned hackers had spent months trying to infiltrate computer systems for a number of natural gas pipeline operators. ABC News reported the FBI had obtained an al-Qaeda video calling for “electronic jihad” against U.S. critical infrastructure. And computer security firm McAfee Corp. warned of coordinated, ongoing cyberattacks on global energy companies in 2011.The hacking episodes foreshadowed how alluring fuel delivery systems are to cyber-criminals, like the Russia-linked group that used DarkSide ransomware to hold Colonial’s computer systems hostage around May 7. The company was forced to shut down its roughly 5,500-mile-long (8,851-kilometers-long) pipeline system, which provides about 45% of the fuel used on the East Coast, spurring outages at filling stations and the payment of a $5 million ransom before service resumed five days later.It’s not clear whether mandates would have thwarted the attack, and investigations are still underway. Colonial has pledged to “review any proposal that takes lessons learned from this event that strengthens or hardens our infrastructure.”Oil and pipeline trade groups steadfastly insist now is not the time for prescriptive federal mandates.“Any discussion of regulation is premature until we have a full understanding of the details surrounding the Colonial attack,” said Suzanne Lemieux, API’s manager of operations security and emergency response. “But we are committed to continuing our robust coordination with all levels of government.”The trade association added in a statement it was generally aligned with the Chamber on the issue in 2012 and cautioned against a prescriptive one-size-fits all regulatory approach that it said would be counterproductive.John Stoody, a spokesman for the Association of Oil Pipe Lines, whose members include Colonial Pipeline, said “We want TSA to get right anything they plan to do.”“For example, an overly broad reporting requirement could overwhelm TSA with hundreds of thousands of cyberattack reports every day that would not do anyone any good,” he said.PartnershipChevron said in an emailed statement that federal regulation “should take a risk-based approach” that gives companies flexibility to defend against threats. And Exxon noted that the rapid evolution of cyber threats means “any formal and prescriptive cybersecurity requirements for the industry are often outdated upon completion.”The Transportation Security Administration has long taken a similar approach. A branch manager in the agency’s office of surface operations last year boasted it involves “very few regulations” and a “cooperative approach to industry adoption of security measure,” according to a presentation archived on the agency’s website.The TSA opted not to regulate the pipeline sector because it felt a partnership with industry was more efficient, said Fox, the retired TSA manager of pipeline security.“A regulation takes months or years to change,” Fox said in a phone interview. “With this partnership we could make a phone call and say we need you to do such and such and it would be reacted to the next day.”Republican FilibusterFox said he didn’t think the Lieberman bill would have prevented the Colonial cyberattack.“You can regulate whatever you like,” Fox said. “We have regulations on speed limits and gun control and all kinds of things so if you regulate something it does not means it’s not going to happen.”Ultimately in 2012, Lieberman and Collins watered down their bill in a desperate bid to win over Republicans to get it passed. They dropped mandates and fines in favor of a measure that would create only optional requirements.But even the pared-back bill wasn’t enough. Continued concerns about liability and privacy haunted the legislation, and the Chamber opposed the new version too. It was twice defeated by a Republican-led filibuster, ultimately falling nine votes shy of the 60 needed to cut off debate in November 2012.Amy Myers Jaffe, a Tufts University professor and author of “Energy’s Digital Future,” said the Colonial cyberattack may be the pipeline industry’s “Macondo moment.”That’s a reference to the Gulf of Mexico oil well that blew out in 2010, killing 11 workers and unleashing the worst oil spill in U.S. history.An overly cozy relationship between federal regulators and oil companies was blamed for contributing to the disaster, Jaffe said. “It’s shocking to me to think that an industry that likes to brag about its safety records would ever have lobbied against having government-run standards that are mandatory for cyber-security in vital energy infrastructure.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • China Huarong’s Journey From Safe Bet to Bad News: A Timeline

    (Bloomberg) -- It’s nearly two months since turbulence erupted around China Huarong Asset Management Co.At the end of March, its 4% perpetual dollar bond was trading at 102 cents on the dollar as investors figured the January execution of former chairman Lai Xiaomin for bribery put a line under past wayward behavior. But the failure of the company to release 2020 results by a March 31 deadline, and a subsequent report by mainland media Caixin that the firm will restructure, sparked weeks of turmoil. The same bond is now at 57 cents.The heart of the matter is whether the central government will rescue a state-owned company that’s integral to the smooth running of the financial system. While there are signs Beijing wants to ensure China Huarong can repay its debts on time, uncertainty prevails.Here’s a look at the key events for China Huarong:May 27Liang Qiang, who currently heads another bad-debt manager, is on track to become president of China Huarong, reports Bloomberg News.May 24China Huarong dollar bonds climb after the managing editor of Caixin Media wrote in an opinion piece that the asset manager is “nowhere near” defaulting on its more than $20 billion of offshore notes.May 21Some of China Huarong’s thinly traded onshore bonds slump after having held up better than the company’s dollar-denominated notes, signaling broadening concern about the firm’s financial health. May 18China Huarong has transferred funds to repay a $300 million note maturing May 20, Bloomberg News reports, the first dollar bond to come due since the delayed 2020 results. Prices for the firm’s dollar bonds slump earlier in the day after the New York Times reports China is planning an overhaul that would inflict “significant losses” on both domestic and foreign China Huarong bondholders.May 17The company has reached funding agreements with state-owned banks to ensure it can repay debt through at least the end of August, by which time China Huarong aims to have completed its 2020 financial statements, according to a Bloomberg News report. That as at least two of its onshore bonds see big price declines in recent days, worrying some investors.May 13The firm says it’s prepared to make future bond payments and has seen no change in the level of government support, seeking to ease investor concerns after a local media report that regulators balked at China Hurarong’s restructuring plan.May 6The company says it transferred funds to pay five offshore bond coupons due the following day, its latest move to meet debt obligations amid persistent doubts about its financial health.April 30China Huarong breaks its silence, with an executive telling media it is prepared to make its bond payments and state backing remains intact. The official also says the week’s rating downgrades “have no factual basis” and are “too pessimistic.”April 29Moody’s Investor Service downgrades China Huarong by one notch to Baa1, adding the firm remains on watch for further downgrade. The cut reflects the company’s weakened funding ability due to market volatility and increased uncertainty over its future, according to the statement.April 27China Huarong units repay bonds maturing that day. The S$600 million ($450 million) bond was repaid with funds provided by China’s biggest state-owned bank, according to a Bloomberg News report.April 26Fitch Ratings downgrades China Huarong by three notches to BBB while dropping the company’s perpetual bonds into junk territory. The lack of transparency over government support for the firm may hamper its ability to refinance debt in offshore markets, Fitch said.April 25China Huarong says it won’t meet an April 30 deadline to file its 2020 report with Hong Kong’s stock exchange because auditors needed more time to finalize a transaction the company first flagged on April 1. Securities and asset-management units said in the days before that they wouldn’t release 2020 results by month’s end.April 22The China Banking and Insurance Regulatory Commission asks lenders to extend China Huarong’s upcoming loans by at least six months, according to REDD, citing two bankers from large Chinese commercial lenders.April 21China is considering a plan that would see its central bank assume more than 100 billion yuan ($15 billion) of China Huarong assets to help clean up the firm’s balance sheet, according to a Bloomberg News report. Peer China Cinda Asset Management Co. was said to be planning the sale of perpetual bonds in the second quarter.April 20China Huarong’s key offshore financing unit says it returned to profitability in the first quarter and laid a “solid” foundation for transformation. Reorg Research reports that regulators are considering options including a debt restructuring of the unit, China Huarong International Holdings Ltd.April 19Huarong Securities Co. says it wired funds to repay a 2.5 billion yuan local note.April 16The CBIRC says China Huarong’s operations are normal and that the firm has ample liquidity. These are the first official comments about the company’s troubles. Reuters reports Chinese banks have been asked not to withhold loans to Huarong.April 13Fitch and Moody’s both put the company on watch for downgrade. The finance ministry, which owns a majority of Huarong, is considering the transfer of its stake to a unit of the country’s sovereign wealth fund, Bloomberg News reports. Chinese officials signal they want failing local government financing vehicles to restructure or go bust if debts can’t be repaid.April 9China Huarong says it has been making debt payments “on time” and its operations are “normal.” Bloomberg reports the company intends to keep Huarong International as part of a potential overhaul that would avoid the need of a debt restructuring or government recapitalization. S&P Global Ratings puts China Huarong’s credit ratings on watch for possible downgrade.April 8China Huarong is preparing to offload non-core and loss-making units as part of a broad plan to revive profitability that would avoid the need for a debt restructuring or government recapitalization, Bloomberg News reports.April 6Selling gains steam in China Huarong’s dollar bonds, following a holiday in China. Huarong Securities says there has been no major change to its operations, in response to a price plunge for its 3 billion yuan local bond.April 1China Huarong announces a delay in releasing 2020 results, saying its auditor is unable to finalize a transaction. Stock trading is suspended and spreads jump on the firm’s dollar bonds while China Huarong tells investors its business is running as usual. Caixin reports the company submitted restructuring and other major reform plans to government officials and shareholders.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • World Faces Longer Supply Shortage as China’s Factories Squeezed

    (Bloomberg) -- Eric Li’s factory making glass lampshades for companies including Home Depot Inc. is being stretched to its limits with sales doubling their pre-pandemic level.But like many Chinese manufacturers, he doesn’t plan to expand operations -- a reticence that could slow the pace of China’s economic growth this year and prolong a shortage of goods being felt around the world as demand picks up.Surging prices of raw materials means “margins are compressed,” explains Li, owner of Huizhou Baizhan Glass Co. Ltd., in the southern Chinese province of Guangdong, which makes about $30 million in annual revenue. With the global economic recovery still uneven, “the future is very unclear, so there is not much push to expand capacity,” he adds.The combination of higher input prices, uncertainty about export prospects and a weak recovery in domestic consumer demand meant Chinese manufacturing investment from January to April was 0.4% below the same period in 2019, according to official statistics (comparing to 2019 strips out the distortion of last year’s pandemic data).Due to the vast size of China’s manufacturing sector, that poses a risk both to the nation’s growth -- which is currently predicted to reach 8.5% in 2021, according to a Bloomberg tally of economists’ estimates -- and to a global economy that’s grappling with supply shortages and rising prices.Falling ProfitsWeaker-than-expected investment could have a “sizable” impact on GDP growth this year, said Citigroup Inc.’s China economist, Li-gang Liu. Lower investment may dent imports of capital goods and equipment from developed economies like Japan and Germany, “which in turn could drag their economic recovery and rebound as well,” he added.AnHui HERO Electronic Sci & Tec Co. Ltd. is one of those companies feeling the squeeze. Based in the eastern province of Anhui, the company manufactures capacitors used to make electronic circuits, with sales mainly in the domestic market. Jing Yuan, the founder, says orders are up as much as 30% year-on-year, but profits are down 50% due to increasing materials costs that are not easily passed onto clients.The company is under “huge cash pressure” as it needs to pay half a month in advance of delivery in order to secure copper and other metals, which they previously paid for months after receiving, he said. “The commodity issue has to be addressed by the government,” he added.What Bloomberg Economics Says...Chinese industry is absorbing significant cost pressures from rising commodity prices -- damping the inflationary impact for the rest of the world. Will it last? Our analysis of gross margins suggests it could for a while longer: downstream industries -- where the cost crunch is most severe -- still have a small cushion.David Qu, China economistFor the full report, click here.Input shortages mean some manufacturers aren’t able to make use of their existing facilities, so expansion would be of little use. Chinese electric vehicle maker Nio Inc. suspended production at one of its factories last month, due to a shortage of microchips.Modern Casting Ltd., which makes iron and steel products in Guangdong, issued a note to clients this month saying it would not be able to meet its current orders due to high raw material costs. A member of staff who answered the phone at the company’s office confirmed the note, but declined to give further details.Growth TransitionOn top of the higher input costs, Chinese companies face a bumpy transition toward domestic consumer spending to sustain its post-pandemic recovery.Exports, China’s strong-suit last year, may begin to slow as vaccine roll-outs cause consumers in wealthy countries to shift spending back to services. Meanwhile, the growth rate of Chinese consumer spending has yet to fully recover.Investment sentiment among Chinese small and medium-sized enterprises is below levels seen even in 2018-9 when uncertainties from the U.S.-China trade war were a brake on expansion plans, according to a regular survey of more than 500 Chinese companies by Standard Chartered Plc.“Demand is still mainly underpinned by exports, so domestic companies are aware that this is not sustainable,” said Standard Chartered’s China economist, Lan Shen.While some export-oriented sectors have been pushed to their limits, large amounts of slack remain for manufacturers targeting Chinese consumers due to subdued domestic demand.Retail sales growth was 4.3% in April on a two-year average basis, which strips out base effects from the pandemic, less than half pre-pandemic growth rates. Overall capacity use at China’s manufacturers fell to 77.6% in the first quarter from 78.4% in the previous three months, with the automotive sector hit hardest by overcapacity following three years of declining sales volumes.Even for electric vehicles whose sales are surging, most companies have already built their capacity and will now focus on incremental upgrades. “The majority of the investment has been done,” said Jochen Siebert of JSC Automotive Consulting.China ordered state-owned companies to expand last year, with their investment growth of 5.3% in 2020 from the prior year easily outstripping the 1% increase in private investment. But for a sustainable pick-up in investment, the market, not the state, needs to feel confident.Carsten Holz, an expert on Chinese investment statistics at the Hong Kong University of Science and Technology, estimates that privately-owned companies have accounted for 87% of manufacturing investment in 2015, the most recent year of available data. They are more sensitive to input costs.“There is a pandemic plus insecurity about future trade given a new U.S. administration, neither of which is conducive to investment that relies on long-term growth prospects,” Holz said.Mixed PoliciesTransport bottlenecks are also a challenge for export-oriented manufacturers. Gordon Gao, who exports gardening products from China, said that he has had to reject 80% of orders this year due to port delays. In one case, an order placed before mid-February could only be shipped three months later when a client finally secured a container.Beijing has tried to improve conditions for private companies by ordering a crackdown on speculation to curb commodity prices and easing access to bank loans.Yet the government continues to gradually withdraw fiscal and monetary stimulus measures introduced amid the pandemic last year. It set a relatively unambitious target of “above 6%” growth for this year, and the Communist Party’s Politburo signaled last month it would prioritize reforms to control house prices and debt growth.“The policy stance has definitely shifted away from supporting growth and back toward de-risking the financial sector,” said Adam Wolfe, an economist at London-based Absolute Strategy Research. “The risks for economic growth seem tilted to the downside, especially for capital-intensive, construction-linked sectors.”For manufacturers such as Li, a longer period of domestic growth and control over input prices will be needed before capacity expansion is on the cards. While his company of 200 workers took on new permanent staff before the pandemic, for now he’d rather pass the risks of investment on to others.“I wouldn’t do that now, I would rather hire some temporary workers and outsource the rest,” he said.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • In Desperate Move, Venezuela Tries to Make Fuel in Oil Upgraders

    (Bloomberg) -- In the latest desperate attempt to deal with fuel shortages that have crippled Venezuela’s economy, government leaders are trying to repurpose two massive oil upgraders to make a main ingredient for gasoline instead.With U.S. sanctions preventing the country from importing naphtha, a petroleum product its refineries use as feedstock, state-owned Petroleos de Venezuela will seek to make its own at upgraders designed to process heavy crude into lighter oil for the international market, according to documents seen by Bloomberg and people with knowledge of the plan, who asked not to be named because the information isn’t public. The plants are the Petropiar partnership with Chevron Corp. and the Petrocedeno venture with Total SE and Equinor ASA.Venezuela’s acute fuel shortage has forced businesses and factories to shut, while drivers line up for hours or even days to fill up. The conversion of the Hugo Chavez-era crude upgraders marks another dramatic departure from a time when the OPEC-founding nation was a top oil exporter, now reduced to one of the poorest nations in the Western Hemisphere under the U.S.-sanctioned Nicolas Maduro regime.The work at the Petropiar and Petrocedeno plants, which strip away sulfur and other impurities from the sludgy heavy crude from the Orinoco Belt, started in April, the people said.It’s unclear how PDVSA can pull the overhaul off without the help of foreign partners or international contractors, which can no longer do business with the battered, cash-strapped state oil producer. The company has struggled to even perform basic maintenance at its plants, which lack replacement parts it hasn’t been able to import.PDVSA, Chevron and Total didn’t immediately reply to requests for comment. A representative from Equinor deferred any questions to PDVSA. Refineries typically make their own heavy naphtha as a stage in the processing of crude into gasoline. PDVSA units have long lost that ability because of broken equipment. The country’s upgraders are in better shape because they were operated with the help of foreign partners until recently. Plus, the processing of heavy oil into so-called synthetic crude at the plants already involved some naphtha production.To convert the upgraders into feedstock suppliers for refineries, which will involve installing new equipment and pipelines, PDVSA is hiring local contractors, the people said. The overhaul will not prevent the plants from also being used for their original purpose of making synthetic crude.The plants will initially feed PDVSA’s Cardon and Puerto La Cruz refineries with 30,000 barrels a day of heavy naphtha, the documents show. A plan to lay pipelines that will allow supplies to reach 112,000 barrels a day are still being discussed with contractors, the people said.It’s not the first time the upgraders have been repurposed since U.S. sanctions have practically shut off Venezuela from the international crude market.PDVSA’s four upgraders were converted into simpler blending plants in mid-2019. The shift meant halting the production of the Petrozuata and Zuata Sweet light-oil blends to focus on Merey 16 heavy oil, mostly sold on the Asian market.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Price of Gold Fundamental Daily Forecast – Choppy Trade as Investors Consider Fed’s Next Move

    Due to thinning trade conditions ahead of an extended U.S. holiday weekend, we could see some wild price swings today if the data come in out of line.

  • Investment Firms Bet Against Cathie Wood’s Top ETF as Tech Faltered

    (Bloomberg) -- Cathie Wood’s recent travails have been a boon for some of her peers in money management.About two dozen investment advisers including Balyasny Asset Management and a unit of Blackstone Group Inc. bought bearish put options during the first quarter on the Ark Innovation exchange traded fund, her firm’s main investment vehicle, regulatory filings show.While money managers often buy puts on ETFs to protect their portfolios against market declines, the options are typically tied to passively managed index funds such as the SPDR S&P 500 ETF Trust.Yet technology-focused Ark Innovation grew so large so quickly -- to $28 billion in mid-February from $1.9 billion at the end of 2019 -- that some managers saw the actively managed fund as a better alternative to buffer against a slump in stocks that surged during the pandemic.Big Take: Cathie Wood’s Bad Spring Is a Blip When Future Is So Magnificent“The Ark Innovation fund had a tremendous run over the course of 2020 and early 2021,” Efrem Kamen, the head of New York-based Pura Vida Investments, said in an email. “However, the level of fund flows into the ETF appeared to be extreme.”Representatives of Wood’s Ark Investment Management didn’t reply to phone and email messages seeking comment.Ark Innovation, with the ticker symbol ARKK, returned 153% last year, buoyed by investments including Tesla Inc. and Zoom Video Communications Inc. Its fortunes began to sour in mid-February, as signs of inflation spurred investors to ditch tech stocks in favor of value plays that would benefit from rising prices, such as banks and mining companies.The ETF proved more volatile than some of the index funds that have traditionally served as a proxy for the tech sector, making it a more profitable way to bet against such stocks or hedge other holdings. ARKK tumbled 29% through Wednesday from its Feb. 12 peak, while the Invesco QQQ ETF, which tracks the Nasdaq 100, fell 0.7%.“If you were sitting on some serious gains heading into this year and you want to protect those gains, it was an effective strategy,” Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said of buying ARKK puts.Investors pay a premium to acquire put options, which in turn entitle them to sell shares of a public company or an ETF to another investor in the future at a set price. While some managers and market-makers hold a combination of ARKK shares along with put and call options, the firms analyzed by Bloomberg held such puts exclusively or predominantly.Deer Park Road Management Co., a Steamboat Springs, Colorado-based firm that trades asset- and mortgage-backed securities and corporate debt, bought put options during the first quarter on 2.15 million ARKK shares, according to its quarterly 13F filing with the Securities and Exchange Commission. The shares covered by the puts had a face value of almost $258 million at the end of March.The put options were priced too low when viewed in terms of the ETF’s past volatility, making them more attractive as a tool for hedging risk, Deer Park Chief Investment Officer Scott Burg said in a phone interview. Deer Park bought them to protect against rising interest rates, he said.“As rates have been going up, the tech stocks have been getting crushed,” said Burg, whose firm managed about $3.7 billion at year-end. “You could see that in the first quarter.”Read more: Cathie Wood Fans Buckle Up as ETF Assets FallPura Vida acquired put options on 622,500 ARKK shares with a face value of almost $75 million during the first quarter, according to its filing. The hedge fund’s portfolio had exposure to some of the same areas as the ETF, including genomics and telemedicine, according to Kamen.“Volatility on Ark Innovation ETF was an efficient way to hedge some of the factor risk in our portfolio,” Kamen said. Factors refer to the characteristics of a stock, such as being a growth or a value play.Blackstone Alternative Solutions disclosed that it bought put options on 1.3 million ARKK shares in the first quarter, while Balyasny acquired puts on 436,500 shares with a face value of $52 million as of March 31. Other buyers of the puts during the period included Taconic Capital Advisors, Ikarian Capital and Davidson Kempner Capital Management.“Sometimes hedge funds look at Tesla and Ark, and think ‘This is just way too much and I can make a killing here,’” said Eric Balchunas, an ETF analyst for Bloomberg Intelligence. “If you made a few of those trades, you’ve probably done OK in the last couple months.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.