The leaders of Noranda Aluminum Holding have their work cut out for them as they attempt to grow the Franklin-based company's shareholder equity and lift a share price that has lost more than 90 percent of its value (Ticker: NOR) over the past year. A big reason for that is that the global aluminum sector is struggling mightily under the weight of overproduction, which has pushed down prices by 25 percent since last September. China's overinvestment has played a huge role, but the problem isn't limited to the People's Republic.
More than 10 percent of smelting capacity outside of China, or 3.5 million tonnes of production, is running in the red with a combined LME and U.S. premium of $1,800 per tonne, according to Wood Mackenzie data from second-quarter results. On Friday, three-month aluminum was at $1,621, with a U.S. premium of $175 a tonne.
SEE ALSO: Our past coverage of Noranda
Executives at Louisiana-Pacific say they will not push to regain their wood license from the government of Quebec and thus have no plans to restart their oriented strand board mill in Chambord, north of Quebec City. Nashville-based LP ramped down the plant in 2008, and execs say the construction materials market still hasn't regained enough strength for them to consider restarting work there.
SEE ALSO: Want to practice your French? Here's another LP release reacting to the Quebec government's move to revoke the company's wood license.
Nashville-based Delta Coals has been awarded a $7.8 million contract for black coal deliveries from the Defense Logistics Agency Energy. It is a one-year deal with a completion date of May 31, 2016. Delta will distribute coal to Army and Marine Corps locations in Tennessee and Virginia.
The leaders of Louisiana-Pacific and Ainsworth Lumber have agreed to extend to June 2 today's deadline to obtain regulatory approval of their planned $1.1 billion combination. The companies say their extension is the result of "continued discussions" with the Canadian Competition Bureau and the Antitrust Division of the U.S. Department of Justice. Either company can add another 45 days to the deal's timeline if needed.
Shares of LP (Ticker: LPX) are down about 1 percent this afternoon to $15.25. Investors appear to be expecting not-so-good news about the Ainsworth acquisition and have pushed the stock down nearly 20 percent since the beginning of March.
Analysts at Moody's Investors Service have placed the debt ratings of Noranda Aluminum Holdings under review for downgrade, saying the Franklin-based company "will face challenges in returning to and sustaining more robust metrics without meaningful improvement in its cost position or reduction in debt balances." The low prices of aluminum products on world markets have been a big drag for Noranda, which has launched a second cost-cutting program that aims to save $225 million by 2016.
Word of Moody's move didn't do Noranda shares (Ticker: NOR) a lot of good. They stumbled out of the gate and kept falling into the afternoon until they were off more than 10 percent at $2.31. That put them within shouting distance of their all-time low set in October.
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