* Jefferies & Co hired as adviser for strategic review
* Nordion suspended dividend in Sept after arbitration
* Dispute with supplier AECL moves into court
* Shares jump 7 pct on Toronto Stock Exchange
(Adds detail on earnings and market cap, background)
Jan 28 Canada's Nordion Inc, a major
provider of isotopes used in medical imaging, said on Monday it
hired advisers to examine options for its future, sending its
shares sharply higher.
Nordion suspended its dividend in September after an
arbitration panel rejected its claim for damages from its main
supplier, state-owned Atomic Energy of Canada Ltd, putting one
of its core businesses in jeopardy.
The company said no decision had been made on a deal and it
intends to stay with planned business activities during the
strategic review. Jefferies & Co will advise the company in the
On a conference call with analysts and investors, Chief
Executive Steve West said the review was in "early stages" and
declined to comment further.
The company also reported financial results after postponing
their release in December, when it said it was in discussions to
amend the terms of a credit facility. It reached a new $80
million credit facility agreement on Jan. 25.
Nordion is one of the world's leading producers of
molybdenum-99, used in medical imaging, and it depends on raw
material from AECL's aging facility in Chalk River, Ontario.
The plant has been operating since 1957, and while it is
licensed to operate until 2016, its future beyond that is
unclear. Nordion had hoped to force AECL to pay damages or
complete two new reactors that would have ensured a long-term
supply of the radioactive material it needs.
BACK TO COURT
Nordion's dispute with AECL turns on the Maple reactors,
built to replace Chalk River. The reactors never worked
properly, and AECL halted an effort to repair them in 2008.
Nordion has argued that AECL is legally required to complete the
reactors, or pay damages.
Despite the arbitration loss, it has not given up that
objective, and on Jan. 18 it returned to court, amending its
2008 statement of claim against AECL in the Ontario Superior
Court of Justice to seek damages of $243.5 million for
negligence and breach of their production agreement.
Nordion has struggled to find an alternative supplier. It
terminated a preliminary agreement with a subsidiary of Russia's
State Atomic Energy Corp in October and said it would begin
talks with a related Russian source.
But even if the negotiations result in a new deal, Nordion
would obtain less material than previously thought, the company
Moly-99 is not Nordion's only product, and the company has
said in the past that it expects future growth to be driven by
its "targeted therapies" business, which includes TheraSphere, a
liver cancer treatment. It also sells sterilization systems that
use radiation, and isotopes used in sterilization. Those
businesses do not depend on the Chalk River facility.
Nordion took a $24.1 million charge related to the ongoing
litigation, and that, paired with higher income tax expenses,
hurt its fourth-quarter results, even as revenue edged higher.
For the quarter to Oct. 31, it reported a loss of $43.5
million, or 70 cents a share, compared with a profit of $6.9
million, or 11 cents, a year earlier.
Excluding the litigation charge and other items, the company
earned $21.4 million, or 34 cents a share, up from $18.7
million, or 30 cents, a year earlier. Revenue rose 1 percent to
The sterilization segment's earnings rose 15 percent to
$16.7 million, and earnings from medical isotopes - the division
that sells moly-99 - fell 1 percent to $11.3 million, hurt by
falling demand. Nordion said it expects medical isotopes revenue
to decline 20 percent in fiscal 2013.
Regulators closed the Chalk River facility because of safety
concerns in fall of 2007 and again from May 2009 to August 2010,
causing a worldwide shortage of moly-99 and encouraging many of
Nordion's customers to diversify suppliers.
The stock rose 7.3 percent to C$6.90 on the Toronto Stock
Exchange. Prior to Monday's gains, the shares had fallen 41
percent from a year-high of C$10.86 in September. At current
levels, the company has a market capitalization of C$427 million
($1 = $1.01 Canadian)
(Reporting by Ankur Banerjee in Bangalore and Allison Martell
in Toronto; Editing by Janet Guttsman, Dan Grebler and Nick