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Streetwise

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

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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Leading GMP banker leaves the firm

TIM KILADZE

One of GMP Securities’ top investment bankers has left the investment dealer.

Neil Selfe, a well-known relationship manager, resigned from the independent firm Friday.

Historically, GMP has been known for underwriting and advising on resource-related deals, but the recent rout in metals and energy prices has hurt this revenue stream.

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Lexpert: Pipeline proposals mired in hurdles

LEXPERT

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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BMO takes energy investment bankers poached by UBS AG to court

TIM KILADZE

Bank of Montreal wants a Texas court to intervene after a rival firm poached a team of its energy bankers.

In early March, UBS AG hired 15 BMO employees in Texas who specialized in energy acquisitions and divestitures, in order to beef up its investment banking capabilities in Houston. The news didn’t ruffle feathers early on despite the sizable number of departures, mainly because some of the employees were only junior staffers. But BMO now worries confidential information was taken.

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Ex-Barrick CFO returns to Agnico Eagle as president

RACHELLE YOUNGLAI

Barrick Gold Corp.’s former chief financial officer is returning to Agnico Eagle Mines Ltd. as the gold miner’s president, the company said on Thursday.

Ammar Al-Joundi served as Agnico’s chief financial officer in between stints at Barrick, the world’s biggest gold producer.

Mr. Al-Joundi was one of many Barrick veterans who have left the company since former Goldman Sachs executive John Thornton became Barrick’s chairman last year.

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Sprott hires founder of metals-focused hedge fund

SEAN SILCOFF

Sprott Inc. has hired investment management veteran Trey Reik as a senior portfolio manager and precious metal strategist for Sprott Asset Management USA. As usual, the question with any investment manager hired by Sprott isn’t, Is this person a gold bug? It’s, How much of a gold bug are they?

The answer is, a lot of a gold bug. Mr. Reik, founder and managing member of Bristol Investment Partners LLC, a precious metals-focused hedge fund, is a prominent commentator on matters related to precious metals, gold mining companies and monetary policy.

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RBC’s rough share sale catches bankers by surprise

TIM KILADZE

The latest preferred share offering from Royal Bank of Canada struggled to sell, marking a surprising change following a string of successful deals.

Since the financial crisis, Canadian banks have sold billions of dollars worth of preferred shares to boost their capital level – and they’ve been easy sells for the most part.

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A pump-and-dump scheme straight out of a textbook

ADRIAN MYERS

Where stocks are frequently traded in liquid markets, making money on them requires a super-power that probably doesn’t exist. To make money (consistently, that is) in Google stock, you’ve got to be better at analyzing information about Google than thousands of highly paid analysts and traders who themselves can’t beat each other consistently. And if you find someone who has this power, it will cost you a lot of your money to have them invest it for you. And you probably haven’t found them. If you don’t want to believe me, believe Cliff Asness and John Liew.

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Anglo's Chilean mines on the market, but they’re no prize

RACHELLE YOUNGLAI

Anglo American Plc finally hung the ‘for sale’ sign on two of its Chilean copper mines, and the assets don’t look pretty.

For about six months, the London-based mining giant has been getting its Mantoverde and Mantos Blancos mines ready for sale.

When Anglo first started gauging whether there was any interest in the mines, copper was one of the few commodities whose prices had not been decimated.

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Bay Street loses millions on Silver Wheaton bought deal

TIM KILADZE

The unsold shares from Silver Wheaton Corp.’s billion-dollar financing are finally sitting in the hands of investors, but getting them there required the underwriters to endure substantial losses.

Earlier this month, the company, which specializes in buying royalty streams from miners, launched an $800-million (U.S.) share offering, worth roughly $1-billion (Canadian), to help finance the acquisition of a gold stream from Vale SA. The money was raised by way of a bought deal, in which a company issues equity to a syndicate of underwriters who then re-sell the shares.

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Trimming mutual fund fees isn’t cut and dried

TIM KILADZE

To angry investor advocates, the question of whether to crack down on mutual fund fees is an open-and-shut case.

Ever since provincial securities regulators started reviewing whether trailing commissions ought to be curtailed, trailer fee opponents have framed this as a simple issue: To them, investors are getting ripped off because retail advisers simply put client money in certain funds that pay them 1 per cent of the invested assets annually, whether those funds are the best value for money or not.

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Medical marijuana and independent brokers: a beautiful friendship?

NIALL McGEE

In late 2013, when Bruce Linton, CEO of Tweed Marijuana Inc. needed to raise money, he wasn’t going to waste his time calling one of the big banks. They weren’t lending to anyone in the sector, he says – and not much has changed in the interim.

“The banks do not lend any credit [to medical marijuana companies]. There is no debt facility for us.” said Mr. Linton in a telephone interview.

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Why TD and BMO mortgage rate cuts are late in coming

LUKE KAWA

Amid the fears of excess housing market exuberance reignited by Tuesday’s mortgage rate cuts by the Bank of Montreal and Toronto-Dominion Bank, one question isn’t being asked: Are mortgage rates actually too high?

From the bond market’s perspective, these rate reductions were, in fact, long overdue. Five-year fixed mortgage rates have drifted far away from a key benchmark over the past six months.

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Moody’s looks at banks differently – but not ours

DAVID BERMAN

Here’s something that might make you nervous, if you’re a bank executive. Moody’s Investors Service changed its outlook on more than 1,000 global banks (including operating banks, holding companies, branches and subsidiaries), following a shift in the credit rating agency’s methodology.

But relax: Canadian banks are unaffected.

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For U.S. investors, the Canadian oil patch still looks attractive

JEFFREY JONES

Boy, it’s tough out there in oil country.

Each day brings new pain, with crude prices falling through successive floors and stocks across the sector bending to selling pressure as investors fret over companies’ ability to make all their payments.

This week, as oil prices fell to six-year lows, some analysts suggested that the downturn had entered its next stage, pulled by the growing glut of oil around the world.

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IA Clarington names new president

CLARE O’HARA

Mutual fund provider IA Clarington Investments Inc. has named a new leader for the firm.

Carl Mustos has been appointed president of IA Clarington Investments. Mr. Mustos replaces David Scandiffio, who left the company earlier this month to join CIBC as president and CEO of CIBC Asset Management. Mr. Scandiffio headed IA Clarington investments for over 11 years.

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