Coverage Changes

Private capital firm Birch Hill Equity Partner completed its takeover of HOMEQ Corp for CAD9.50 per share in cash on Dec. 5, 2012. Investors should by now have received cash for their shares. HOMEQ is no longer traded on the Toronto Stock Exchange or covered in How They Rate.

Progress Energy Resources Corp is now part of Malaysian national oil company Petronas. Shareholders should by now have received CAD22 per share in cash. The acquisition of PRT Growing Services Ltd by a private capital firm has also been consummated, with PRT holders receiving CAD4.45 per share in cash.

Both Progress Energy and PRT Growing Services will be de-listed from How They Rate next month.

New to coverage this month is engineering and design firm Genivar Inc (TSX: GNV, OTC: GNVUF). The former income trust converted to a corporation in January 2011 without cutting its dividend. Genivar is listed under Business Trusts.

Advice Changes

Boyd Group Income Fund (TSX: BYD-U, OTC: BFGIF)–To Buy @ 16 from Hold. The company continues to cheaply fund rapid expansion and appears headed for another robust distribution increase in 2013.

Data Group Inc (TSX: DGI, OTC: DGPIF)–To Hold from SELL. A new product offering is a hopeful sign that the announced 54 percent dividend cut for this year will be the last.

Dundee Industrial REIT (TSX: DIR-U, OTC: None)–To Buy @ 11 from Hold. The owner of industrial properties is successfully adding scale to its operation while maintaining a strong balance sheet. The monthly distribution is CAD0.05625 per unit.

Extendicare Inc (TSX: EXE, OTC: EXETF)–To Buy @ 8 from Hold. Cuts in Medicare reimbursement are still a threat. But the US fiscal cliff deal limits immediate risk to the dividend, while a cut is already priced in.

Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–To Buy @ 18 from Hold. The purchase of Elbow River limits uncertainty from the pending expiration of a major fuel supply contract and is strongly accretive to distributable cash flow.

Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–To Buy @ 22 from Hold. The share price has backed off and is again at a value level.

PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–To Buy @ 9 from Hold. The financially strong, geographically diversified and technologically advanced rig operator is the best bet in a sector that continues to face severe headwinds.

Poseidon Concepts Corp (TSX: PSN, OTC: POOSF)–To SELL from Hold. The elimination of the dividend, sacking of key executives and planned writedown of previously booked revenue are plenty of reason to doubt the company’s ability to continue as a going concern.

Primaris Retail REIT (TSX: PMZ-U, OTC: PMZFF)–To Hold from Buy @ 20. The retail REIT’s units have surged due to an unsolicited takeover offer of CAD26 per unit from a private capital firm. Management is resisting the offer and may get a higher bid, but the REIT’s unit price will probably dip if the suitor walks away.

Progress Energy Resources Corp—To Acquired from SELL. The merger with Petronas is complete, and shareholders should by now have received CAD22 per share in cash.

PRT Growing Services Ltd—To Acquired from SELL. Investors should have received CD4.45 per share in cash by this time.

WestJet Airlines Ltd (TSX: WJA, OTC: WJAFF)–To Hold from Buy @ 16. The stock has surged well past our buy target, but high-flying airline shares have a way of plummeting to earth on the slightest disappointment.

Ratings Changes

Algonquin Power & Utilities Corp (TSX: AQN, OTC: AQUNF)–To 5 from 4. Recent acquisitions of operating utilities and successful permanent financing have added visibility to long-term earnings growth.

AvenEx Energy Corp (TSX: AVF, OTC: AVNDF)–To 0 from 1. The surprising sale of the Elbow River marketing unit radically changes the revenue mix. The company plans a special meeting for shareholders on Feb. 19, 2013.

Bell Aliant Inc (TSX: BA, OTC: BLIAF)–To 4 from 3. The coupon rate on debt maturing the next two years averages 2 percentage points more than the yield-to-maturity on the company’s five-year debt. Refinancing will cut interest costs.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF)–To 2 from 3. Management has affirmed its intention to maintain the current dividend but volatile natural gas liquids prices limit predictability of future profits.

CML Healthcare Inc (TSX: CLC, OTC: CMHIF)–To 3 from 4. The political situation in Ontario appears increasingly unsteady, as are the province’s finances. The potential impact of possible rate cuts on future earnings reduces dividend safety.

Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–To 4 from 5. Capital spending plans are on track, but volatile oil prices limit profit visibility for 2013.

Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–To 2 from 3. A spike in 2013 capital spending will likely reduce cash available for distribution. Deterioration in the zinc market could pressure the dividend.

Poseidon Concepts Corp (TSX: PSN, OTC: POOSF)–To 0 from 1. As if this company doesn’t have enough troubles, there’s CAD55.54 million drawn on its CAD100 million credit line that matures June 30, 2014. After the stock’s recent waterfall drop, that’s an amount nearly equal to half of the company’s current market capitalization.