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Streetwise

News and analysis on Bay Street and the world of finance
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Entry archive:

On heels of poor quarter, BlackBerry’s Chen demotes head of sales

SEAN SILCOFF

On the heels of poorer-than-expected third quarter results, BlackBerry Ltd. chief John Chen has demoted the company’s head of sales, part of a broader set of management changes at the beleaguered smartphone maker.

BlackBerry confirmed in an e-mail Wednesday that Eric Johnson, formerly president of global sales for BlackBerry, has been replaced by the company’s president of enterprise, John Sims. Mr. Johnson, hired 11 months ago, “will focus on driving enterprise sales, deepening our relationships with enterprise customers and ensuring” the company’s server software and portfolio of services “are meeting expectations” in a new role, a company spokesman said in an e-mail.

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What high-frequency trading really does to Canadian markets

ADRIAN MYERS

Christmas is a time of high stress and, in a lot of people’s wallets, low liquidity. Oddly enough, some of the big finance questions of 2014 revolved around high stress and low liquidity. In particular, observers wondered, do high-frequency traders (HFTs) withdraw from equity markets during uncertain and stressful times, causing “phantom liquidity” and putting excess downwards pressure on stock prices? Now, thanks to a paper by Rober Korjczyk of Northwestern University and Dermot Murphy of the University of Illinois at Chicago, published by the Investment Industry Regulatory Organization of Canada (IIROC) and using Canadian data, we are a step closer to an answer.

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Oil junior Arcan’s restructuring wins backing of key fund manager

JEFFREY JONES

Stornoway Portfolio Management Inc. is backing a restructuring of struggling Arcan Resources Ltd. that includes swapping more than half its sizable debt for equity, four months after the fund manager blocked a takeover of most of the junior oil company.

Arcan has announced an exchange of debentures that will result in its debt being reduced to $150.6-million from $324.6-million. The company’s capital spending has been limited by its heavy debt burden and it said last week that the sharp drop in oil prices limited its options.

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CIBC divides steel products maker to conquer

SEAN SILCOFF

Some small caps are trickier to sell than others. CIBC World Markets Inc. gets full marks for cleverly pulling off a successful $363-million auction of Oakville, Ont. manufacturer Vicwest Inc. Two auctions, to be precise.

When Vicwest converted into an income trust in 2005, the company was a perfect fit for the structure. It had two different businesses with one thing in common: both bashed steel. One made grain storage containers for farms; the other made siding and roofing for builders. The idea was that their differing business cycles would complement each other, funding steady payouts.

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Ontario Teachers snags asset from troubled Bahraini firm

JACQUELINE NELSON

Ontario Teachers’ Pension Plan is acquiring its latest asset from a recovering investment firm that continues to sell its holdings.

Teachers’ is buying Clearwater, Fl.-based moving and self-storage company Pods, which will bring a storage container right to customer’s doorsteps, and then keep the box in a repository, or move it to a new location. The name “Pods” stands for Portable On-Demand Storage.

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Bay Street gives back: trading desks donate millions in 2014

TIM KILADZE

These can be tough times for equity traders. Computerized trades are eating into their market share, and trading volumes have fallen. Yet Canadian trading desks continue to donate to charity.

Across Bay Street, multiple investment banks now donate a full day’s equity trading commissions to charity, meaning millions of dollars are raised to help Canadians who need support.

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’Tis not the season for bought deals

NIALL McGEE

A volatile cocktail of choppy equity markets, skittish investor sentiment and plain old bad luck have contributed to a number of bought deal financings going awry in the past few weeks. Bankers have tens of millions of securities in inventory that they had planned to sell at a profit, but are stuck with – for the time being at least.

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Are trees and rocks falling out of favour?

Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.

Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.

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Proxy battle at Aberdeen could redraw insider definition

JACQUIE McNISH

There is nothing messier than a proxy battle in Canada’s junior mining sector.

Ousted executives rally shareholders to reclaim the throne. Duelling slates of directors vie for board control. Investors attack management practices. And, oh, the allegations. Oppressive! Egregious! Outrageous! Mining roughhousing has delivered some of the best corporate theatre in Canadian business history. It has also shaped some of the country’s most important case law on the boundaries of shareholder rights and corporate conduct.

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Talisman takeover by Repsol may not lead to more deals in short term

JEFFREY JONES

Energy companies will face increasing pressure to sell assets or seek buyers for their entire operations if low oil prices persist as expected, but it could be several months into 2015 before the deal tally picks up.

Spain’s Repsol SA launched the largest Canadian oil-patch takeover of this year on Monday, bidding $8.3-billion (U.S.) for Calgary-based Talisman Energy Inc., although discussions had been going on for about six months. It may not usher in a flood of new transactions in the short term.

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Why Couche-Tard stocked its shelves with The Pantry

JACQUELINE NELSON

Alimentation Couche-Tard Inc. searched high and low for businesses to buy, but in the end, a recovering brand in a familiar market won out.

Couche-Tard had been vocal about its acquisition plans for months. On a November conference call, Brian Hannasch, chief executive of Couche-Tard, said the company was “actively looking at opportunities of different sizes in different countries.”

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Element Financial’s fortunes tied with U.S. recovery

JACQUELINE NELSON

Equipment financing company Element Financial Corp. has attracted investors through rapid growth and acquisitions. But for the company to keep the party going in 2015, both management and the U.S. economy need to have a good year.

Toronto-based Element built its business on enabling automotive fleets, rail companies and other firms to finance equipment for commercial use. Founder and chief executive Steven Hudson says that where large banks once dominated the space, the financial crisis saw them step away from it. And the company’s new estimates for equipment loans and revenues in 2015 indicate there’s still plenty of room to grow.

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What to watch for in OSC's Finkelstein ruling

ADRIAN MYERS

For many kids at Christmas, if their parents had a good year in the stock market, those materialistic little monsters will have plenty of Playstation games and Frozen dolls to play with this year. However, if their parents had too good a year in the stock market, the parents’ portfolio will invite regulatory scrutiny that could turn Christmas from a time of happy anticipation to one of dread and fear. They will not know it’s Christmas time at all.

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Dragon’s Den star Wekerle sells $2.5-million of his company’s debt

NIALL McGEE

Michael Wekerle has sold almost one quarter of the $10.7-million in debt he holds in Difference Capital Financial Inc. since mid Oct., and claims that a margin call from his broker, GMP Capital Inc. forced his hand.

In July 2013, Mr. Wekerle, who is the co-founder and CEO of Difference and a co-host of CBC TV’s popular Dragon’s Den program, bought $10-million in the company’s convertible debentures through an account he holds at GMP, his former employer. At the time, Mr. Wekerle says, he put up $2.5-million and bought the rest on margin, meaning that he did not have to hold the funds in his account.

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Manulife names Quebec head after Standard Life acquisition

TIM KILADZE

Manulife Financial Corp. wasn’t kidding around when management said they are focused on Quebec.

After striking a deal in September to buy Standard Life Canada for $4-billion, Manulife has named the takeover target’s chief executive as its new Quebec head.

Charles Guay will take on the newly created role, and also becomes an executive vice-president of institutional markets. In the latter role, he will oversee the Canadian division’s group benefits, group savings and affinity markets business.

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Talisman takeover bid tough for Repsol shareholders to stomach

TIM KILADZE

For a friendly acquisition, Repsol SA’s $8.3-billion (U.S.) takeover bid for Talisman Energy Inc. is certainly polarizing.

If you’re a long-time Talisman shareholder, you may not love that Repsol’s buying you out at $9.33 (Canadian) per share given that the peak over the last two years is $13.83, but at the very least you have to be relieved. In an ugly energy market, the Spanish giant was willing to step up and catch a falling knife.

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Encana plans to spend big, but where is the money?

JEFFREY JONES And CARRIE TAIT

When Encana Corp. bulked up on $9-billion (U.S.) of U.S. shale assets this year, a barrel of oil was fetching $94 or higher. Now oil prices have collapsed to below $56, and investors are wondering how the big energy company expects to fund drilling and expansion amid dwindling cash flow expectations.

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Calgary hedge fund closing energy-focused offering

NIALL McGEE

Calgary-based hedge fund company Kootenay Capital Management Corp. is shutting down its Global Energy Absolute Return Fund.

In a letter to unitholders, the company said “it intends to dissolve the partnership on or about January 10, 2015, and return capital to its unitholders.”

Kootenay cited “a period of challenging investment conditions for natural resource investors” and difficulties in attracting fresh capital. The size of the fund is said to be in the $25-million range.

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Canadian watchdogs crack down on stock trades sent to U.S.

TIM KILADZE

Canadian regulators are taking action to curtail the number of stock trades that are sent to the U.S.

South of the border, alternative trading venues have boosted their profiles through “payment for order flow,” a process in which they effectively buy orders from brokers. In Canada, such payments are prohibited, but there are growing worries that brokers here are sending trades to the U.S. to skirt the rules.

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Canaccord Genuity clears air on Amaya probe

TIM KILADZE

After rumours of impropriety sank its stock on Friday, Canaccord Genuity Corp. wants its employees and investors to know it hasn’t been targeted for any wrongdoing.

Canaccord’s stock fell 16 per cent late last week following news that Quebec’s securities watchdog is probing trading activity surrounding Amaya Inc.’s blockbuster takeover of the PokerStars and Full Tilt Poker franchises. Because Canaccord advised on the takeover, and because there wasn’t much clarity as to what the Autorité des marchés financiers is looking into, rumours started to spread that the investment bank could be in serious trouble.

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Mr. Poloz’s tightrope act

Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.

Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.

More »

Red Sky closes hedge funds amid industry struggles

NIALL McGEE AND JACQUIE McNISH

Red Sky Capital Management is closing its two hedge funds, the latest sign of stress for small players in an industry struggling with poor returns and increased competition for investors.

In a letter to unit holders this week, Red Sky founder and chief executive officer Timothy Lazaris said the decision to close the funds was a “very difficult decision to make” that was prompted by the company’s inability to “gain sales traction” with investors.

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Dentons adds another ex-Heenan partner

JEFF GRAY

Dentons LLP has picked up yet another former Heenan Blaikie LLP partner, this time in Vancouver.

Jillian Frank, who was an employment lawyer with Heenan Blaikie before the national firm surprised many and abruptly disintegrated earlier this year, at first moved with others fleeing Heenan’s ruins to a newly formed Vancouver boutique: Gall Legge Grant & Munroe LLP.

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Loophole in takeover law turns ‘early warning’ into ‘no warning’

ADRIAN MYERS

Last night, while writing this article at a beach bar in Florida, I saw heavily lubricated locals and evenly browned tourists cutting a rug while my pasty self sat nursing a Bud writing about Canadian securities law. If the elements of this scene sound somewhat inconsistent, you are already in the spirit of this column, which is all about an inconsistency within Canada’s securities regulation.

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Preferred share deals feed Bay Street with millions in fees

TIM KILADZE

Retail brokers and a select group of investment bankers have a lot to be thankful for this year. The deluge of preferred share financings by Canadian banks has served up a boatload of fees.

Since January, roughly $5-billion of bank preferred shares have been issued because Canadian lenders are grappling with new global regulations. In order for their preferred shares to count as bank capital, they’ve had to re-purchase outstanding shares and replace them with new securities that conform to regulators’ expectations.

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Clarus Securities tech analyst moving to Dundee Capital Markets

NIALL McGEE

Technology analyst Eyal Ofir is leaving Clarus Securities Inc. and will join Dundee Capital Markets as vice president, technology, equity research on Dec. 18.

In a telephone interview, Mr. Ofir said that he’s looking forward to joining Dundee, where he will be able to “compete at a higher level against some of the bigger organizations” on Bay Street. He had been with Clarus for 20 months and was a ranked analyst in the Brendan Wood International survey in 2013 and 2014. Before Clarus he was a tech analyst with Canaccord Genuity Inc. for five years.

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BuildDirect taps the market for second time this year

SEAN SILCOFF

On the heels of a string of successful financings for promising technology companies in the past year, Vancouver-based BuildDirect, an online home improvement retailer, has announced its second financing of the year.

After securing $30-million from venture financiers last January, BuildDirect has now closed another $50-million financing. Past backers, including Silicon Valley venture capital firm Mohr Davidow Ventures and Canadian pension giant OMERS, as well as newcomer BMO Asset Management, provided the funding for a common share offering, bringing BuildDirect’s total raised to date to just over $100-million. Sources familiar with the deal say the latest financing values the company at around $450-million.

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Barrick’s Thornton and Munk load up on miner’s stock

RACHELLE YOUNGLAI

Barrick Gold Corp.’s John Thornton, Peter Munk and two board members have bought more shares of the Canadian gold company as the miner trades at multiyear lows.

Mr. Thornton, who became chairman in April, bought a total of 415,000 shares at $12.01 (U.S.) last week, according to Canadian regulatory filings. The purchases were made under his name, as well as his wife’s and three children, according to the filings. Mr. Thornton and his family now own more than one million shares of Barrick.

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RBC appoints heads of PH&N, BlueBay as co-CEOs of asset management

NIALL McGEE

Royal Bank of Canada’s asset management arm has promoted two of its senior executives to the roles of co-CEOs. Damon Williams and Alex Khein will take over the top job at RBC Global Asset Management (RBC GAM), effective May 1, 2015, from RBC GAM CEO John Montalbano, who becomes vice-chairman of RBC Wealth Management.

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AGF dividend cut hits co-founder's family the hardest

JACQUIE McNISH

AGF Management Ltd. is expected to save more $60-million by slashing its dividend 70 per cent, and a big chunk of that cash harvest will come out of the pockets of the fund manager’s founding Goldring family.

AGF’s chief executive officer Blake Goldring and chief operating officer Judy Goldring (both of whom are children of Warren Goldring, who co-founded the company 57 years ago) indirectly own a total of about 13 million Class B shares through a family holding company. The two executives also indirectly own an additional 46,000 Class A voting shares.

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