Last week, the shares of Bennett Environmental Inc. plunged after the company revealed that the status of a major contract in New Jersey to clean contaminated soil has been in doubt for almost a year; a new contract would be much less profitable.
The shares of the Oakville, Ontario-based company trade on the Toronto Stock Exchange. They lost a third of their value late last week to close at a new 52-week low of $8.72 a share. The drop of $4.29 puts the shares at less than a third of the value of their 52-week high of $28.45 a share on Feb. 4, 2004.
A May, 2003, contract to remediated the soil at a U.S. Superfund site contaminated by the wood preservative creosote has allegedly been withdrawn by the U.S. Army Corps of Engineers following complaints made by an unsuccessful bidder soon after the contract was awarded. Under that contract, subcontractor Bennett was to clean about 300,000 tonnes of soil. A new June 3, 2004, contract covered the treatment of up to only on third that tonnage "on less favorable economic terms," according to the company. As a result of the new contract, about US $90-million has been removed from the contract backlog. According to RBC Dominion Securities Inc. the expected revenue from the new contract would decline by 78 per cent (to $45-million from $202-million).
Bennett reported a loss of $2.5-million on revenue of $12.8-million for the six months ended June 30, 2004.