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Streetwise

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

Why do dual-class share structures persist? Because they work

Adrian Myers

Every area has its debate that won’t go away: Is Peyton Manning a better quarterback than Tom Brady? Is string theory a viable theory of everything? Did Han Solo shoot first? In corporate law, it’s the debate over what constitutes good corporate governance that, recently, has been revived by the debate over a long-slumbering aspect of corporate law: dual-class share structures.

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Why dull utility deals are suddenly so hot

TIM KILADZE

For a sector that nearly everyone mocks for being so boring, Canadian utilities sure are shocking the market. In the past six months, they’ve delivered the biggest Canadian privatization in decades by way of an initial public offering (IPO) and three multibillion-dollar acquisitions in the United States. How do you like them apples?

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Daily Deals: Franco-Nevada gets more metal streams and Canaccord cuts deep again

NIALL McGEE

Franco-Nevada strikes streaming deal

Franco-Nevada Corp. raised $550-million (U.S.) and struck a deal to buy precious metal from one of Glencore PLC’s mines, the Canadian company’s second big acquisition in less than a year.

Franco-Nevada, which buys streams of future precious metal production from miners, will use $500-million of the proceeds to pay for future production from Glencore’s Antapaccay mine in Peru.

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Franco-Nevada raises $550-million to buy part of Glencore mine

RACHELLE YOUNGLAI

Franco-Nevada Corp raised $550-million (U.S.) and struck a deal to buy precious metal from one of Glencore PLC’s mines, the Canadian company’s second big acquisition in less than a year.

Franco-Nevada, which buys streams of future precious metal production from miners, will use $500-million of the proceeds to pay for production from Glencore’s Antapaccay mine in Peru.

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Seven Generations boosts share issue

Jeffrey Jones

Don’t look now, but there’s demand for energy shares, at least among some institutions.

Seven Generations Energy Ltd. added $40-million to a $260-million financing the Alberta Montney gas producer announced on Tuesday amid sputtering oil and gas markets.

The issue, at $14 a share, was a bought deal led by Peters & Co. Ltd. and RBC Dominion Securities Ltd. placed with a limited number of institutional investors. It may have been a tougher sell to retail buyers, given skittishness in the face of crude prices that have sunk back below $28 (U.S.) a barrel this week.

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Orange Capital’s managing partner resigns as director of Bellatrix

Jeffrey Jones

Orange Capital LLC’s managing partner has resigned as a director of Calgary-based Bellatrix Exploration Ltd. following Orange’s decision to wind up its investment fund.

Daniel Lewis, the activist hedge fund’s founder, is stepping down as a director of Bellatrix as he studies what to do with the interest in the company, whose shares are down about 80 per cent since Orange bought a position in the summer of 2014 as oil prices have collapsed.

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Lexpert: Concordia’s Amdipharm deal closes after weeks of outrage

Its shares riding high, Concordia Healthcare was ready to snag Britain-based Amdipharm Mercury last September. Then, two weeks after the announcement, the deal faced headwinds as The New York Times alleged pricing abuses in the sector. Hillary Clinton tweeted outrage. A probe was launched, subpoenas issued. Short-sellers piled on with accusations of fraud.

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What job cuts to expect from Canaccord in Canada

NIALL McGEE

Canaccord Genuity Group Inc. has made deep staffing cuts to its British operations and is planning significant reductions in Canada and the United States amid an industry-wide collapse in revenues.

Sources close to the company said the Vancouver-based independent brokerage has laid off roughly 55 people in Britain – or 20 per cent of its head count there.

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Seven Generations selling $260-million of shares in private placement

Jeffrey Jones

Seven Generations Energy Ltd. is selling $260-million of shares in a private placement, despite sputtering oil and gas markets that have kept pressure on energy stocks.

Seven Generations said it is issuing 18.6 million shares at $14 apiece in what has become a rare occurrence of oil and gas stock offerings. The company’s shares closed down nearly 5 per cent at $14.38 on the Toronto Stock Exchange on Tuesday.

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Daily Deals: Fortis’s big buy and brave voices needed on Bay St.

NIALL McGEE

DEAL OF THE DAY

Fortis diversifies with $6.9-billion deal for U.S. transmission company ITC

St. John’s-based Fortis Inc. spooked skittish investors on Tuesday with a premium-priced, $6.9-billion (U.S.) deal for Michigan-based transmission company ITC Holdings Corp., which will greatly expand its exposure to the American electricity business.

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Porter Airlines searches for buyer, sources say

TIM KILADZE And GREG KEENAN

Toronto’s Porter Aviation Holdings Inc. has been quietly searching for a buyer, throwing the future of its business model as a classy, convenient rival to bigger Canadian airlines into question.

The search process is ongoing, according to people familiar with the plans, and there is no guarantee it will result in a transaction, but the company’s financial backers have been actively looking for an exit strategy through a sale.

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Canaccord parts ways with three senior staffers

NIALL McGEE

Canaccord Genuity Group Inc. has parted ways with three senior staffers, including a high-ranking investment banker.

Jens Mayer, Andrew Jappy and Peter Virvilis – all long-serving Canaccord employees – are the latest to leave the firm, sources said.

Canaccord acquired Genuity Capital Markets in 2010, but over time a reverse takeover of sorts has taken place whereby Genuity staffers have taken on increasingly senior roles and many Canaccord employees have left.

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Fortis bets on infrastructure’s allure with latest electricity deal

JACQUELINE NELSON

Fortis Inc. wants another investor to take a bite out of its latest acquisition – and finding someone with an appetite shouldn’t be too hard.

The St. John's-based utility company’s $6.9-billion (U.S.) deal for U.S. power transmission business ITC Holdings Corp. has only just been announced, and already the buyer is hoping to sell a chunk of the business.

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Please, Bay Street, stir the pot and speak up

TIM KILADZE

At a breakfast panel five years ago inside Torys LLP’s Toronto head office, Ontario Justice H.J. Wilton-Siegel really stepped in it. As a guest at his former law firm, the judge unexpectedly stole the show by speaking up from the audience about Frank Stronach’s prodigious payout from Magna International.

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Daily Deals: A golden merger, Amaya’s future and a battle down under

NIALL McGEE

DEAL OF THE DAY

Tahoe Resources buys Lake Shore Gold for $751-million

Miner Tahoe Resources Inc. said it would buy Canada’s Lake Shore Gold Corp. for about $751-million to add low-cost gold mines in Ontario to its portfolio.

Precious metals miners have been clamping down on costs amid a sharp decline in the price of bullion that has weighed on exploration spending, capital to sustain operations and dividends.

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Invesco dismisses Ian Hardacre, head of firm’s Canadian equities team

SEAN SILCOFF and CLARE O’HARA

One of Canada’s longest-serving mutual-fund investment managers has been shown the door. Ian Hardacre, head of the Canadian equities team at Invesco Canada (previously Trimark Financial) and a 19-year-veteran of the firm, was let go in late January after a poor showing by the flagship $1-billion Trimark Canadian Fund and other funds under his watch over the past 18 months.

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Brookfield and Qube duel over Asciano bid

JACQUELINE NELSON

Canadian investors are digging in their heels on both sides of the $9-billion (Australian) tug-of-war for port and rail company Asciano Ltd. – and the latest development shows neither side is backing down.

On Monday, the months-long negotiations to acquire the Melbourne-based company took a turn as a revised offer from an Australian consortium became the new preference of the board of directors, putting previous board favourite Brookfield Infrastructure Partners LP on unsteady ground.

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National Bank quickly takes writedown on Germany's embattled Maple Bank

DAVID BERMAN

When German regulators on Sunday essentially shut down Maple Bank GmbH, the German subsidiary of Maple Financial Group of Canada, following ongoing investigations into its trading activities, National Bank of Canada’s quick response showed that the move was no surprise.

The bank, which owns a 24.9-per-cent stake in the parent company, immediately announced it was taking a $165-million reserve against the full value of its investment, which will appear in the bank’s first-quarter results at the end of the month.

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Tavani’s new recruit has experience in ‘relationship investing’

JACQUELINE NELSON

Brian Gibson is bringing aboard a new recruit with experience in his not-quite-activist style of investing.

James Alder is joining Mr. Gibson’s relatively new firm Tavani Relationship Investors Inc. – still in fundraising mode – that straddles the lines of private equity and shareholder activism. The firm buys stakes in businesses, and then partners with management teams with the goal to improve results.

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Lexpert: Key players in the Progressive Waste inversion deal

LEXPERT

Lexpert Roundup on the Business of Law

Lexpert identifies and reports on emerging business issues and practice areas in the business of law. Whether online, in our magazine or in the DealsWire e-newsletter, we chronicle deals and lawsuits of interest, and cover issues of broad concern to the legal profession and those who purchase legal services. We hope you enjoy this sample of our latest content.

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Dundee parts ways with three senior staffers

NIALL McGEE

Dundee Capital Markets Inc. has parted ways with three senior members of its sales and trading team, according to sources.

Karen Mate, Jeff Crane and Martin Lavigueur have left the Toronto-based brokerage firm.

Ms. Mate had been with Dundee since mid-2013 and was vice-president institutional sales. Earlier in her career, she spent 14 years at Scotia Capital.

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Lexpert: Canada moves to accepting U.S. corporate tax refugees

From accepting U.S. draft dodgers in the 1960s, Canada has moved in more recent times to accepting U.S. corporate tax refugees. The most recent example? Texas-based Waste Connections Inc., which is buying Canada’s Progressive Waste Solutions Ltd. and relocating the parent company to Ontario.

Burger King used a tax inversion in its purchase of Tim Horton’s and so did Valeant Pharmaceuticals in its acquisition of Biovail Corp., to name a couple more. For corporate law firms struggling with a shrinking client pool, there is work to be mined – not just in structuring the transaction but also in doing the ongoing legal work for the former U.S. head office.

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Ontario’s eSentire raises $20-million in VC funding to tackle digital security threat

SHANE DINGMAN

ESentire Inc., the Cambridge, Ont., digital security software and threat intelligence provider, has raised $19.5-million (U.S.) in new venture capital as it looks to expand its sales teams and operations centres internationally.

The financing, while a relatively large number in Canadian VC circles, is part of a trend of significant investments in the security sector. U.S. companies in the digital security field raised $2.5-billion with 225 investments in 2014, though estimates from CB Insights suggested 2015 saw a slight slowdown.

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Will certainty of royalty regime trigger more oil patch deals?

JEFFREY JONES

With Alberta’s energy royalty question settled, there’s one more reason for oil patch deals to pick up.

Yes, 2015 turned out to be slower than expected for mergers and acquisitions, even as numerous companies found themselves drowning in debt due to skidding crude prices and their stocks sank to the bottom.

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Georgian Partners the belle of the Canadian venture-capital ball

SEAN SILCOFF

Toronto’s Georgian Partners is attempting to amass one of the biggest war chests of a Canadian venture-capital firm in years – a $300-million (U.S.) fund – on the strength of several recent big wins, including last year’s initial public offering of Shopify Inc., which it first backed in 2011.

Sources in the Canadian venture-investing sector say that after just a few months of fundraising, Georgian hit its initial $100-million close on the fund – its third since the firm’s inception in 2008 – around Christmas 2015. They say Georgian has secured initial commitments from past backers, including Terlays Capital, Kensington Capital Partners, Northleaf Capital Partners, Export Development Canada and Bank of Montreal, and is on track to easily raise the next $100-million largely from Canadian investors. Georgian is aiming to raise a significant chunk from U.S. investors, hoping for a fund close in the second quarter. “It’s happening very quickly. They’re in a state where everyone wants to marry them,” a senior source in the Canadian venture-capital industry said. “It’s very rare for a Canadian fund.”

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Private equity and venture capital firms strengthen foreign ties

JACQUELINE NELSON

Canadian private equity and venture capital firms played a bigger role in international deals last year, while also making up a larger slice of the deal market at home.

The country’s private equity and buyout funds worked on 137 deals abroad in 2015, which was more than ever before, according to data from Thomson Reuters. But they weren’t always looking far afield – more than 60 per cent of those deals were investments in U.S. companies.

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Alberta’s new royalty regime leaves some questions unanswered

JEFFREY JONES

A frequent criticism of Alberta’s energy royalty review over the past six months was the uncertainty it created for investors. A few unknowns linger after Friday’s rollout of the new regime.

Industry and investor reaction to the New Democratic Party’s new royalty framework was largely positive after the provincial government left oil sands royalties unchanged and established a flat rate on conventional oil and gas production before capital costs of drilling are paid out.

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Old money, new tech: Seymour Schulich bets on VC fund

SEAN SILCOFF

Seymour Schulich, one of Canada’s wealthiest mining entrepreneurs, is making a big bet that he can strike gold in a different sector: high tech.

Mr. Schulich has committed more than $50-million to a venture capital fund launched by a new Canadian-U.S. venture capital firm, Leaders Fund. The firm is being co-led by his son-in-law, David Stein, an accomplished tech entrepreneur whose two previous firms, Workbrain and Rypple, sold to U.S. companies. The VC firm announced last month it had closed the $100-million fund but made no mention in its release of the Schulich connection.

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Weekly Deals: Jacob Securities’ shaky final months and Frind’s investment problem

DEAL OF THE WEEK:

Borealis buys second-largest stake in Spanish oil transport giant CLH

Another Canadian pension fund is buying a slice of a Spanish oil transport giant, spotlighting the impact that some of the country’s largest investors could have in energy infrastructure deals at home and abroad.

Borealis Infrastructure, a division of the Ontario Municipal Employees Retirement System, will be the second-largest investor in Spain’s largest oil transport and storage company. The pension fund gathered up a 24.15-per-cent stake in Companía Logística de Hidrocarburos (CLH) through two recent deals, building out its investment footprint in Europe.

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Hydro One’s latest acquisition marks shift in electricity business

JACQUELINE NELSON

Hydro One Ltd. is tightening its grip on Ontario’s electricity transmission network, snapping up a century-old business in a deal that highlights the evolution of the province’s power system.

Ontario’s largest electrical utility said Friday that it would buy Great Lakes Power Transmission LP for $222-million in cash from Brookfield Infrastructure Partners LP, while taking on $151-million of Great Lakes’ debt. The deal will increase Hydro One’s transmission capacity in Ontario to more than 98 per cent, according to the Ontario Energy Board, up from about 97 per cent. While it’s not a big jump in market share, Great Lakes is the second-largest transmission group in the province, leaving just a few small players still standing.

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