Maitland/AMO Morning Monitor – Wednesday 29 December 2021

29th December 2021

In the news

  • Companies raised $12.1trillion in 2021 by selling stock, issuing debt and writing new loans, as many global markets soared thanks to central bank stimulus and recovery from the pandemic.
  • The Prime Minister is under pressure to slash the Covid-19 self-isolation period from seven to five days, as health service chiefs warn that the number of NHS staff in quarantine will make patient care unsustainable.
  • Telefonica has said it has reached an agreement with labour unions to reduce its domestic workforce by 15% via voluntary redundancy.
  • The Resolution Foundation think tank has warned that UK households will lose £1,200 next year to stalling wages, rising tax, and soaring energy bills.
  • The number of patients hospitalised with Covid-19 has soared by 38% in just one week, as health chiefs warn that hospitals are struggling with medics ‘dropping like flies’.

Politics today

  • Parliament is in recess until January 5.

Stock market moves

  • In the US, stocks fell with the S&P 500 and the Nasdaq 100 losing 0.1% and 0.48% respectively.
  • In Asia, Japan’s Topix index fell 0.3%, China’s Shanghai Composite index decreased 0.91% and Hong Kong’s Hang Seng Index lost 1.09%.
  • In Europe, the FTSE 100 has opened flat.

Corporate announcements

* Maitland Client

Diversified Energy Company PLC Diversified Closes Haynesville Divestiture
  • Diversified Energy announced the closing of its sale of certain predominantly undeveloped Haynesville acreage in Texas.
  • Diversified and Oaktree Capital Management, L.P. divested their working interests in the acreage for a total cash consideration of approximately $67.4m (net $34.6m to Diversified) after closing price adjustments, a second closing under the transaction of up to approximately $4m (net $2m to Diversified) may be conducted at a date in the near future.
  • Diversified ascribed no value to the undeveloped Haynesville leasehold though this divestiture effectively reduces the Company’s investment in the Assets Diversified acquired from Tanos by 29% to $83m from the original $118m, net of purchase price adjustments.
  • Rusty Hutson, Jr., CEO, said: “Monetizing a portion of the undeveloped Haynesville acreage we acquired in the Tanos transaction marks a strong finish to an exceptional year for Diversified and boosts our returns from that acquisition by reducing our purchase price by nearly 30%. Using the nearly $35 million of proceeds to reduce the borrowings on our revolving credit facility enhances our financial flexibility as we evaluate other value-accretive opportunities. We enter 2022 with momentum as we integrate our Central Region assets, progress our comprehensive ESG initiatives and remain ever focused on opportunities to expand our portfolio of producing assets.”

 

AstraZeneca PLC AstraZeneca and Ionis close eplontersen deal
  • AstraZeneca has closed a global development and commercialisation agreement with Ionis Pharmaceuticals, Inc. for eplontersen, formerly known as IONIS-TTR-LRX.
  • The companies will jointly develop and commercialise eplontersen in the US, while AstraZeneca will develop and commercialise it in the rest of the world, excluding Latin America.
  • Under the terms of the agreement, the upfront payment from AstraZeneca to Ionis is $200m, with additional conditional payments of up to $485m to be made following regulatory approvals.
  • The transaction will be funded with cash and is expected to be neutral to Core earnings in 2021. It will be accounted for as an intangible asset acquisition, recognised initially at the upfront amount, with any potential future milestone payments capitalised into the intangible asset as they are recognised.
Fresnillo PLC Juanicipio Commissioning Update
  • Fresnillo PLC and MAG Silver Corp. have provided a commissioning update on the Juanicipio Project (56%/44% Fresnillo and MAG Silver, respectively).
  • The ‘Comisión Federal de Electricidad’, the state-owned electrical company, has notified Fresnillo that approval to complete the tie-in to the national power grid cannot be granted yet and the mill commissioning timeline will therefore be extended by approximately six months. This is directly related to knock-on effects of the pandemic on the electrical company’s operations.
  • As operator, Fresnillo will continue to engage closely with the CFE and ‘El Centro Nacional de Control de Energía’ to do all that it can to expedite these necessary approvals. Although there remains uncertainty regarding the timing for connecting the Juanicipio Project to the power grid, the current estimate, which continues to be subject to potential COVID-19 related realities, is that full load commissioning activities will be approved sometime after the first week of May 2022.
  • Octavio Alvidrez, CEO, said: “As an industry, we continue to manage the ongoing impact of the pandemic and while frustrating for all concerned, we recognize this situation is beyond the control of all parties, the health and safety of our people and all our partners remains our priority. We thank the CFE for their engagement and will continue to work closely with them to accelerate grid connection as quickly as we can. Meanwhile, we will continue to process mineralized development material by using any excess capacity available at the Minera Fresnillo and Minera Saucito plants, minimizing any impact on future cashflow generation.”