Ventra Group Inc. is considering whether to put all or part of itself on the market, even as potential suitors grab shares of the struggling automotive supplier.
The Oakville, Ontario, company announced March 19 it has hired financial adviser BMO Nesbitt Burns to consider "alternatives to maximize shareholder value," including the potential sale of noncore businesses or the entire company.
"The current market value of Ventra shares does not reflect the strength and potential of the company's core operations, and we are committed to take whatever actions are necessary to maximize shareholder value," Ventra Chairman Spencer Lanthier said in a news release.
Spokeswoman Yvette Alonso said Ventra would have no further comment on the action for now but probably will address the issue during its annual meeting March 29 in Toronto.
Ventra produces a variety of automotive components, including mechanical systems and plastic bumper fascias and exterior trim.
It posted US$177.8 million in injection molding sales in North America for its last fiscal year.
The decision to seek outside advisers comes as American metal bumper specialist Flex-N-Gate Corp., through its Canadian subsidiary, has bought up 17.7 percent of Ventra's shares. That purchase is part of a plan to take control of at least part of the company, either through stock acquisition or buying portions outright.
"We are in discussions directly with Ventra regarding the assets that they think are not core ... and with their investment bankers on creating opportunities," said Timothy F. Graham, president of 3051932 Nova Scotia Co., a Windsor, Ontario-based unit of Flex-N-Gate Canada.
The company does not want to disrupt any discussions on Ventra's long-term future, Graham said. As a stockholder, Flex-N-Gate wants to ensure its shares have value.
"We just want to be sure if there's an opportunity for Ventra and Flex," he said. "We are neither the big, bad wolf nor the white knight for anybody."
Flex-N-Gate Canada is a subsidiary of Flex-N-Gate Corp. of Urbana, Ill., a private company owned by Chief Executive Officer Shahid R. Khan.
The parent does not release sales numbers but has about 3,500 employees with facilities in Illinois, Michigan and Ontario.
It produces metal bumper systems for Big Three automakers, Graham said. It has worked with Ventra in the past, providing metal substructures for Ventra's plastic bumper fascias.
"It's effectively a small company with a strategic competence," Graham said. "[Flex and Ventra] have both known each other for a couple of years, starting with a customer relationship."
In addition, Proprietary Industries Inc., a Calgary, Alberta, firm with holdings in the oil and gas, mining and real-estate industries, has purchased 12.5 percent of Ventra's shares, listing the purchase as for "investment purposes."
Ventra has had a rough period. In October, it had to turn two European acquisitions back to their original owner in exchange for canceling debt. The companies, based in Witten, Germany, had operated as Lunke Ventra Automotive GmbH.
Ventra ended its 2000 fiscal year with C$860.7 million (US$547.5 million) in sales — a 10.4 percent jump from 1999 — but with a loss of C$68 million (US$43.2 million), compared to profit of C$16.1 million (US$10.2 million) a year earlier.
The loss was due, in part, to a one-time pretax charge of C$53.7 million (US$31.1 million) related to the European operations.
Ventra's financial outlook improved in the first quarter of its current fiscal year, which began Oct. 1, with the company posting C$1.3 million (US$827,000) in profit. But its stock price already had taken a hit.
In January 1999, Ventra stock, traded on the Toronto stock exchange, was selling at more than C$4 per share (US$2.54).
Even a year ago, it went for more than C$2 per share (US$2.54).
By December it was down to C$0.40 (US$0.25). The price since has rebounded to C$1.41 (US$0.90). Proprietary Industries had purchased 5.8 million shares for an average price of C$0.70 (US$0.44).
Ventra had to bring in consultants to help it determine its future, noted Rich Morrow, an analyst with the Canadian Imperial Bank of Commerce in Mississauga, Ontario.
"I'm sure there is a huge debate internally, in terms of what they do to improve themselves," he said. "They're trying to deal with the whole view of what it will take to put the company on a better path."
It is too early to even guess at what the long-term outlook is for Ventra, he said, whether it will survive in some new form or be swallowed up through an acquisition.
"At this point, it's all in a pretty speculative mode," Morrow said. "I really don't know what direction they're going to go next."