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Streetwise

News and analysis on Bay Street and the world of finance
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Retired CIBC executives McCaughey, Nesbitt to earn an extra $25-million

TIM KILADZE

The top two executives who retired from Canadian Imperial Bank of Commerce last September are guaranteed to earn an extra $25-million combined in “post-employment arrangements,” even though they no longer work for the financial institution.

Under agreements signed by CIBC, former chief executive officer Gerry McCaughey and former chief operating officer Richard Nesbitt will be paid $16.7-million and $8.5-million, respectively, in addition to the compensation they received for working up to their retirement date of Sept. 15, 2014.

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Laricina and CPPIB show that in roiled market, niceties go by the wayside

JEFFREY JONES

Laricina Energy Ltd. is the just latest in a string of small oil sands developers to implode, but a deteriorating relationship with its high-profile major shareholder, Canada Pension Plan Investment Board, gives the tale a dark twist.

An Alberta court granted privately held Laricina protection from its creditors on Monday, after the CPPIB demanded it repay $150-million in debt that had been in default for months, something it was unable to do.

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CPPIB docks its latest investment at British shipping ports

JACQUELINE NELSON

The Canada Pension Plan Investment Board is casting an anchor into the business of shipping ports, taking a stake in a major British operator.

CPPIB said Tuesday that it had struck a $2.9-billion deal for at least 30 per cent of Associated British Ports (ABP), a network of 21 ports in England, Scotland and Wales. The Toronto-based fund is making the investment alongside British investment manager Hermes Infrastructure.

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Iamgold in talks to buy AngloGold’s stake in Mali mines

RACHELLE YOUNGLAI

Canada’s Iamgold Corp. is in talks to buy AngloGold Ashanti’s stake in two mines in Mali that the companies own together.

Iamgold and South Africa’s AngloGold each own about 40 per cent in the Sadiola and Yatela mines, with the Mali government holding the remaining 20 per cent.

“Acquiring [AngloGold’s] share of these assets under the right terms has always been an option for us,” said Laura Young, Iamgold’s director of investor relations.

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Market’s appetite for bought deals roars on

NIALL McGEE

The latest big bought deal appears to have gone down without too much of a fuss.

Yesterday, after the markets closed, DH Corp. announced a $825-million bought deal financing package as part of its $1.25-billion acquisition of payment services provider Fundtech. As per usual, brokers agreed to buy the shares at a discount with the intention of flipping them for a quick profit. The trick is to price the deal high enough to keep the company issuing the stock happy, but low enough to entice investors to bite. The risk is often shared among investment banks, as is the case here, with CIBC World Markets Inc., RBC Dominion Securities Inc. and Scotia Capital Inc. co-leading the deal.

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New leadership at Canadian Securities Administrators

CLARE O’HARA

The head of Quebec’s provincial regulator will be taking over the lead at the Canadian Securities Administrators, an association of provincial and territorial securities regulators.

Louis Morisset, president and CEO of Autorité des marchés financiers, has been appointed chair of the CSA, replacing Bill Rice, chair and CEO of the Alberta Securities Commission, who has served as chair of the CSA since January 2011.

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Memo to bank CEOs: Beware of chasing growth at all costs

TIM KILADZE

This won’t be easy for Canadians to swallow. But after all these years of stellar profits, our treasured banks can’t keep growing at such an incredible clip.

Facing a challenging market, would it really be that bad if our lenders looked more like boring, dependable utilities that pay stable dividends than growth stocks that chase bigger bottom lines at any and all costs?

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‘Investors with greenbacks’ eye Canada for takeovers

LUKE KAWA

The $12.8-billion (U.S.) acquisition of Catamaran Corp. announced Monday could signal the start of a wave of foreign takeovers of Canadian-listed companies, as the lower loonie effectively puts many companies up for sale.

With the Canadian dollar trading below 79 cents, crude oil prices slumping and the outlook for the economy uncertain, foreign firms are expected to have their sights set on Canadian companies, particularly those with a high share of international sales. American firms will likely be eager suitors, as financing costs south of the border stay low and corporate balance sheets remain relatively strong.

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Canadian energy companies issue record first-quarter shares

JEFFREY JONES

Canadian energy companies issued a record $5.5-billion of stock in the first quarter as they scrambled to get debt levels in check in the face of the oil-price collapse.

Cenovus Energy Inc., Encana Corp. and Peyto Exploration & Development Corp. were among numerous producers to issue shares in the past three months as crude slumped to six-year lows.

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DH Corp. acquires Fundtech for $1.25-billion in bid to expand U.S. business

JACQUELINE NELSON

Financial technology firm DH Corp. is set to expand globally and target bigger banks as it acquires Fundtech Ltd., provider of payment processing and other services.

Toronto-headquartered DH said Monday that its $1.25-billion (U.S.) deal for New York-based Fundtech offers offers a platform to expand DH’s business in the United States and in other countries around the world.

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Moody’s scolds National Bank over African investment

DAVID BERMAN

Moody’s Investors Service isn’t thrilled with National Bank of Canada’s latest global foray, warning that the bank’s push into West Africa is “credit negative.”

National Bank last week announced that it had acquired a 20.9 per cent stake in NSIA Participations, a banking and insurance group based in Ivory Coast, adding to recent investments in Cambodia and Mauritius.

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$12.8-billion deal for Canadian(ish) tech firm

SEAN SILCOFF

So long Catamaran Corp., we barely knew you. Catamaran has agreed to sell itself to health insurer UnitedHealth Group Inc. for $12.8-billion (U.S.), giving the buyer a leading player in the pharmacy benefit management and record keeping business. To the naked eye this looks like a deal between two U.S. companies, but in fact, it’s one of the largest takeovers of a Canadian technology company ever – as long as you apply an asterisk or two.

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Teachers CIO prepares to exit

JACQUELINE NELSON

An experienced executive of the Ontario Teachers’ Pension Plan is preparing to retire.

Neil Petroff, chief investment officer and executive vice president, will leave the pension fund on June 1.

A lot of institutional knowledge will leave with Mr. Petroff, who joined Teachers in 1993 and was promoted to vice-president in 1995. During his tenure, he has overseen many aspects of the investment business at Teachers as a member of the executive team, including fixed-income, alternative investments and tactical asset allocation.

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Canaccord CEO Paul Reynolds in serious condition after Hawaii triathlon

BERTRAND MAROTTE and NIALL McGEE

Paul Reynolds, CEO of Canaccord Genuity Group Inc., is in serious condition in hospital after encountering an “unexpected medical emergency” while competing in a triathlon in Hawaii.

Mr. Reynolds was competing in the Lavaman Waikoloa Triathlon on Sunday morning, when he got into trouble during the swim portion of the race.

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Three Canadian energy firms, with three very different stocks, CEO pay

NIALL McGEE

Three Canadian energy companies of varying sizes; three very different stock market performances in 2014. And three very different pay packets for the men at the top of the food chain.

Steve Williams, CEO of Suncor Energy Ltd. (market cap $53-billion), made $12.4-million last year, which was down by a smidge compared with the $12.8-million he made in 2013. The hit came mainly because his yearly bonus of around $2-million fell by about $400,000. We could split hairs but Mr. Williams’ compensation appears to be in line with the share performance of Suncor, which was flat in 2014.

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Oil storage brims in U.S. and Canada, but for different reasons

JEFFREY JONES

Oil inventories in Edmonton have surged to a record high, but for different reasons than in Cushing, Okla., where brimming stockpiles have contributed to slumping crude prices and put pressure on struggling producers to cut costs and sell assets.

Crude in storage in Edmonton and Hardisty, Alta., to the east, surged by one million barrels last week, according to market intelligence provider Genscape. The gains were part of an overall Canadian oil storage build of 2.6-million barrels according to the firm’s estimates, gleaned through the use of infrared cameras and mounted on aircraft and other high-tech gear.

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Big banks uneasy with Conservatives’ consumer-code plans

Simon Doyle

Simon Doyle is a reporter based in Ottawa who specializes in lobbying and public affairs. Follow him on Twitter @sdoyle333.

The Conservative government has taken a consumer-friendly approach to telecommunications, broadcasting, cross-border shopping and credit cards.

It’s enough to make bankers uneasy, as their sector is next.

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Feds raise foreign takeover threshold – but there’s a catch

NIALL McGEE

The Federal Government is raising the threshold at which foreign takeovers of Canadian firms will trigger a review under the Investment Canada Act. But because of a change in how a target company’s size will be calculated, it could lead to an increase in the number of deals being scrutinized, not a reduction.

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Legacy vouched for up to $5.6-million of CEO’s debt

CARRIE TAIT

Legacy Oil + Gas Inc. is backstopping a loan for its chief executive officer after a drop in oil prices eroded the value of the company’s shares.

Trent Yanko and his wife bought $5.684-million worth of Legacy shares in a margin account with the Bank of Nova Scotia last summer, according to financial documents Legacy released Wednesday. The Yankos exercised roughly 1.75 million warrants, converting them into Legacy shares at a strike price of $3.24 each, on July 17. Legacy’s stock closed at $8.53 on the Toronto Stock Exchange that day and the benchmark price for oil in North America closed at $103.84 (U.S.) per barrel.

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Former IIROC chief leads Aequitas board

CLARE O'HARA

The former head of Canada’s security industry regulator has joined Canada’s newest trading venue, launched by Aequitas Innovations Inc.

Susan Wolburgh Jenah, former president and CEO of Investment Industry Regulatory Organization of Canada, was appointed Chairwoman of the Aequitas NEO Exchange Inc.’s board of directors.

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Traders worry new Aequitas exchange won’t change anything

TIM KILADZE

Few people dare say it publicly, but the impending launch of a new trading venue in Canada comes with one glaring question: Will it actually change anything?

Come Friday, Aequitas Innovations Inc. will cap its two-year journey to create a new stock market. Backed by major financial institutions, including Royal Bank of Canada and CI Investments Inc., Aequitas will flip the switch on its trading system and start taking on the Toronto Stock Exchange, which currently enjoys near-monopoly status across the country.

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Peyto joins energy stock-issue rush

JEFFREY JONES

Add Peyto Exploration & Development Corp. to the rush of Canadian producers tapping equity markets in the face of the energy-sector downturn.

Peyto said on Wednesday is selling $150-million of shares in a bought deal, with proceeds earmarked for debt reduction and to help fund capital spending.

The company, seen as one of the stronger players amid depressed oil and gas prices, is offering 4.4-million shares at $34.25 apiece. Underwriters, led by Bank of Montreal, can buy an additional 15 per cent to cover over-allotments.

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Scotiabank at risk of large loss after collapse of miner Allied Nevada

TIM KILADZE

The collapse of a major U.S. gold miner has ensnared Bank of Nova Scotia, putting the Canadian lender at risk of losing $73-million, if not more.

Plagued by years of negative cash flows, troubled bullion producer Allied Nevada Gold Corp. filed for creditor protection in Delaware on March 10 – a major blow to a company worth more than $5-billion as recently as 2012.

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New financial ringmaster in the wings with Cirque du Soleil sale

JACQUIE McNISH and NICOLAS VAN PRAET

The sale of Quebec’s famed Cirque du Soleil is moving into the final stages with bidders given until next week to submit offers to acquire a controlling stake from founder Guy Laliberté.

Mr. Laliberté, a onetime street performer who parlayed his fire-breathing skills into the world’s most celebrated circus company, has agreed to sell all but 10 per cent of his stake in the company, according to sources familiar with the process. Mr. Laliberté initially planned to sell a minority interest, but people familiar with negotiations said interested buyers are pushing for control.

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Discounted gas market bad news for industry, relief for consumers

JEFFREY JONES

Every once in a while, life surprises you by playing out as predicted.

It’s what happened in the natural gas market this winter, and for an energy industry preoccupied by the crash in oil prices, it’s not a good thing.

Despite some bone-chilling weather in the eastern part of the continent, gas supplies in storage in the United States are more than 50 per cent higher than last year with just days left before the end of the winter heating season.

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What the yuan hub in Toronto really means for business

DAVE MORRIS

Monday’s official launch of Toronto as a settlement hub for the offshore Chinese currency seems important. Then again, so does agricultural policy reform, but it’s of limited use in capital markets and/or dinner conversation. How much of an impact will renminbi settlement in Canada really have?

In 2009, currency controls on the renminbi began to ease – Chinese companies were allowed to use the Hong Kong market to trade their renminbi (dubbed CNY) for “off-shore Renminbi” (known as CNH), which could then be freely used in all sorts of transactions. In 2010, for example, McDonald’s Corp. sold 200-million worth of renminbi-denominated bonds via Hong Kong; the company was now more or less able to use the funds from the sale to, say, pay the salaries of its executives in Beijing, all without incurring the cost of exchanging U.S. dollars (or whatever it had on hand – Euros, frozen McNuggets) for renminbi.

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What the energy industry needs most: a reality check

TIM KILADZE

Sometimes I have to shake my head. Watching investors swarm to buy shares in recent energy financings makes me wonder whether anyone is thinking about the long game.

Since January, Canadian oil and gas producers have sold more than $4-billion worth of new shares to shore up their balance sheets and help fund capital spending. Although some deals have been slower to sell than others, the overarching message has been pretty clear: Investors are happy to buy in.

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Sandra Stuart takes over as CEO of HSBC Bank Canada

DAVID BERMAN

HSBC Bank Canada has appointed Sandra Stuart as its president and chief executive, replacing Paulo Maia who is leaving for HSBC Latin America just two-and-a-half years into his current position.

The bank called Mr. Maia’s move a “significant promotion” because he will now oversee five countries and 40,000 employees.

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Wells Fargo Securities bets big on Canada, hires again

TIM KILADZE

The U.S. investment bank making heads turn south of the border is hoping to extend its remarkable run into Canada.

Intent on beefing up its capital markets arm, Wells Fargo & Co. is building out its securities team in Canada by hiring someone to run investment banking and naming capital-market co-heads.

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Oil patch divided into haves and have-nots

JEFFREY JONES

The oil-patch downturn has divided producers into two camps: those with financial wherewithal and management credibility to raise money and buy assets; and those forced to hunker down.

Companies from the former group are taking advantage of their strong positions in a weak market, and the investment industry is reaping surprisingly rich rewards, given dire projections a few months ago.

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