SunOpta’s Stock Was Halted On Friday: Here’s Why

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SunOpta’s Stock Was Halted On Friday: Here’s Why

It is quite common for a stock to be halted during a trading session and is normally a daily occurrence.  

When a stock is halted all trading is suspended and this usually happens ahead of a news release that could move the stock in either direction.

A stock halt is neither an indication of good or bad news and gives investors and traders some time to dissect a news release and come to their own conclusions.

On Friday, shares of SunOpta (NASDAQ: STKL), a seller of healthy products including organic grains, seeds, fruits and other commodities, were halted in the early afternoon when the stock was trading just below the $6.90 level.

Soon after the halt, SunOpta announced that it has entered into an agreement with funds managed by Oaktree Capital Management, a notable investor in the consumer retail industry.  

As part of the agreement with Oaktree, SunOpta received an $85 million investment in exchange for preferred shares.  The company will use the funds to partially repay its debt load.  The agreement also implies dilution in the stock which explains why shares almost immediately hit an intra-day low of $5.73 before rebounding to the near $6.50 per share level.

Nevertheless, the stock was still lower by more than 8 percent on the day.

Investors who are familiar with SunOpta’s name shouldn’t find Friday’s announcement surprising.  The company has been a target of an activist investor, Engaged Capital, who has been pushing the company to make some changes to boost shareholder value.

The agreement also saw the appointment of three new members to SunOpta’s Board of Directors:  Dean Hollis, Al Bolles and Brendan Spingstubb.

Hollis is a senior advisor at Oaktree with relevant experience including Chairman of the Board of  AdvancePierre Foods.  Bolles is a former Executive Vice President, Chief Technology & Operations Officer of ConAgra Foods while Springstubb is a senior analyst with Engaged.

“After concluding a comprehensive review of strategic and financial alternatives, we are excited to have a partner in Oaktree that truly appreciates SunOpta’s unique position in the market and the potential value that can be created for all our shareholders through performance improvement and accelerated growth,” said Alan Murray, Chairman of the Board of SunOpta. “Given Oaktree’s deep industry knowledge and operational expertise, we believe they are the ideal partner for SunOpta as we seek to strengthen the company’s operations in a way that can reduce operational volatility and realize sustainable growth and value creation. We believe this strategic option provides the highest risk adjusted return from the many options available and evaluated by the Board.”