One of the main reasons for the stock delisting is to reduce costs, Bernard Roy, the company’s CEO, told OPIS on Tuesday.
“Fees associated with complying with the Toronto Stock Exchange and U.S. requirements are costs, and that will be eliminated,” he said.
Also, World Point’s terminaling operations are in the U.S., and its shareholders are mostly U.S. citizens.
“It does not make sense for the company to be listed in Canada, and the operations are in the U.S.,” Roy said.
In the past year, World Point sold its terminal assets in the Bahamas and the Netherlands.
World Point’s subsidiary, Center Point, owns 12 terminals in the U.S. with a total capacity of 10.4 million bbl. The tanks store gasoline, diesel, fuel oil, liquid asphalt, jet fuel and caustic soda.
Center Point has terminals in West Virginia, New Jersey, New York, Maryland, Texas, Louisiana, Virginia, Tennessee, Illinois, Arkansas and Missouri.
The stock buy-back from World Point Holdings, an entity controlled by the Novelly family, will provide liquidity for its shareholders. Tony Novelly is the chairman of World Point Terminals. He is also the CEO and majority owner of
Apex Oil Co.
In its third-quarter earnings report, the company said that liquidity risk, credit risk and interest risk could affect World Point’s future business results.
However, Roy said that these risks did not contribute to the company’s decision to delist.
Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with the settlement of its financial liabilities. The company’s exposure to liquidity risk is primarily due to the fixed nature of most of its expenses.
Credit risk arises from cash held with banks, credit exposure to customers
(including outstanding accounts receivable), and counterparty risk associated with certain of the company’s short-term investments and its derivative instrument.
The company is exposed to interest risk that arises from fluctuations in interest rates on its cash, short-term investments and a portion of its long-term debt.
Meanwhile, World Point stock on the Toronto Stock Exchange was priced at C$19.25 at end of Monday, with the 52-week range at C$10.50-20.24.