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Streetwise

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

ASC avoids opening insider trading Pandora’s box

ADRIAN MYERS

Prosecuting illegal insider trading requires a certain amount of finesse. Illegal insider trading law gives prosecutors a number of buttons they have to press in just the right way to get a conviction. There isn’t just one way to push a button, however, if they’re creative about it. In particular, the “material fact” element of illegal insider trading may be able to reward a prosecutor who is willing to make more creative, but legally sound, arguments.

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Bloomberg goes for speed with Toronto ‘ticker plant’

ANNA NICOLAOU

As the financial data landscape becomes more and more competitive, market data vendors are ramping up their Canadian content. Bloomberg is now the first data provider to go live with a local “ticker plant” in Toronto, a data-gathering operation that consolidates pricing data from all Canadian exchanges and transmits them to investors via one electronic feed.

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What OSFI’s “authorized” leverage ratio could mean for investors

JACQUELINE NELSON

Canada’s banking regulator is moving ahead with new requirements that it will use to assess the adequacy of a bank’s capital, but one analyst says a new facet of this disclosure could make it harder to compare one financial institution with another.

The Office of the Superintendent of Financial Institutions released a draft of its leverage ratio guidelines on Wednesday, and is holding a consultation period until September 12. The changes will bring Canada’s rules in line with the international framework favoured by the Basel Committee on Banking Supervision, which oversees global banking regulation. The final guidelines are expected by the year’s end.

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Sherritt CEO not pursuing acquisition this year

RACHELLE YOUNGLAI

Sherritt International Corp.’s chief executive said his company will not make a nickel acquisition this year, and is focused on fixing its balance sheet.

“We won’t be doing anything this year. Right now our priorities are getting our balance sheet in shape and paying down some debt,” Sherritt CEO David Pathe said in an interview.

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Baytex sells Bakken assets for $357-million

CARRIE TAIT

There’s one less Canadian company sucking oil out of North Dakota’s much-hyped Bakken play.

Baytex Energy Corp. on Tuesday said it has agreed to sell its assets in North Dakota to SM Energy Co., a publically-traded company out of Denver. Baytex will collect $357-million in the deal, which is effective July 1. It expects to pocket $275-million after taxes are knocked out, according to the company’s press release.

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Cardinal Energy snaps up oil assets, issues stock

JEFFREY JONES

Cardinal Energy Ltd., a dividend-paying junior oil producer, has snapped up assets in central Alberta for $165-million, a deal it is funding with an equity issue.

Cardinal also said it is raising its monthly payout to investors, citing strong commodity prices, lower cost and higher output.

The company, which went public in 2013, is acquiring assets in the Wainwright area of Alberta that produce 1,900 barrels of oil a day. Proved plus probable reserves are pegged at 9.8 million barrels.

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Salman Partners acquires Woodstone Capital

ANNA NICOLAOU

Two struggling independent broker-dealers have merged, joining forces to compete with larger firms in a challenging market for boutique shops.

Vancouver-based, resource-focused dealer Salman Partners Inc. acquired Woodstone Capital with the intention of creating a “diversified, independent” investment dealer, according to a statement.

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Why Teachers loves investing in airports

JACQUELINE NELSON

When it comes to airports, Ontario Teachers’ Pension Plan leaves nothing up in the air.

The Canadian pension fund said Monday that it would be interested in acquiring the half of Bristol International Airport, one of the 10 largest airports in the U.K., that it doesn’t own. And it might just get the chance – its co-owner, Australia’s Macquarie Group, appears to be looking for a buyer.

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Jennings rehires energy analyst

JEFFREY JONES

Jennings Capital Inc. is bolstering its energy research coverage by rehiring an analyst who had left the boutique securities dealer three years ago.

David Ricciardi has joined the firm’s Calgary office as vice-president and exploration and production analyst. Mr. Ricciardi had left the sell side in mid-2012 to run his own investor relations firm. Prior to that, he worked at Jennings, then Clarus Securities Inc.

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CI Financial co-founder G. Raymond Chang was a legend

JACQUELINE NELSON and ANNA NICOLAOU

G. Raymond Chang, a man deeply respected both on and off Bay Street, died Sunday. He was 65.

Mr. Chang, who helped mould CI Financial Corp. into one of the largest Canadian investment funds, had been in the hospital in recent weeks. He suffered from leukemia, and received a bone marrow transplant from his brother nine months ago.

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Tuckamore’s new strategy meets fresh resistance

JACQUELINE NELSON

The shareholders have spoken at Tuckamore Capital Management Inc., and the company’s leaders have given up on a management-led buyout. But management’s new plan for recapitalizing the firm isn’t sitting much better than the old one with dissident investors.

Tuckamore’s management sought to privatize the company in a 75-cent-a-share in a partnership with private equity firm Birch Hill. The aim was to use the Birch Hill capital to refinance senior debt and grow its businesses away from public scrutiny. When Tuckamore was challenged by a group of shareholders who demanded a higher price, the company changed tactics.

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Athabasca release to clarify Dover situation, doesn’t

JEFFREY JONES

Athabasca Oil Corp. issued a “clarification” on Monday of the murky situation regarding the sale of its stake in an Alberta oil sands project. It did little in the way of clarifying.

The stock, which has been under severe pressure in recent weeks, fell 7 per cent on the Toronto Stock Exchange on Monday.

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Private equity invests in world of Canadian dentistry

JACQUELINE NELSON

Private equity activity is heating up in the Canadian health care space in the form of a $121-million investment in Dental Corp. of Canada Holdings Inc.

Mid-market private equity group Imperial Capital joined with the private markets group of pension fund OPTrust to make the investment Monday, after identifying that dental service businesses have been growing quickly in other developed markets.

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TransForce deal shines light on heightened trucking M&A

JACQUELINE NELSON

When transportation and logistics company TransForce Inc. said it would acquire freight transportation company Contrans Group Inc. for $495-million, it marked another major consolidation in the heated trucking industry.

Montreal-based TransForce said the deal for Woodstock, Ont.-based Contrans Group Inc. would combine two acquisitive companies in the trucking industry. TransForce chief executive officer Alain Bédard praised Contrans’s “strong resources, an excellent client base, and importantly, very strong management.”

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EnerCare strikes $550-million deal, aims to silence critics

JACQUELINE NELSON

Canadian water heater company EnerCare Inc. is reuniting with a company it split from more than a decade ago in an acquisition worth more than $550-million. It’s a deal that management hopes will calm restless shareholders.

EnerCare said Thursday it would buy the part of Direct Energy Marketing Ltd. focused on water heater rental, plumbing maintenance, and HVAC services, with a workforce of installation professionals and technicians. This deal reunites EnerCare’s financing side of the business with Direct Energy’s service business.

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What happens when Repsol tells analysts, ‘Don’t ask about Talisman’

JEFFREY JONES

You have to hand it to the analysts who follow Spain’s Repsol SA – they’re an obedient bunch.

In a conference call held on Thursday to discuss the Spanish oil company’s second-quarter results, chief financial officer Miguel Martinez kicked off the question and answer session by saying executives would not comment on “our M&A activities,” that is, that business regarding Talisman Energy Inc.

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OSC appoints new vice-chair

ANNA NICOLAOU

Ontario’s capital markets watchdog has filled a vacancy for its full-time staff. The Ontario Securities Commission appointed Monica Kowal to replace Mary Condon as vice-chair of the OSC, effective Wednesday.

A lawyer by training, Ms. Kowal worked in securities and corporate law on Bay Street for 15 years before joining the OSC. She has served as general counsel at the OSC for the past decade.

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In rare case, REIT board overrules shareholders

TIM KILADZE

Canadian shareholders rarely ruffle feathers over board member appointments. When it comes time to vote, they often do so overwhelmingly in favour of management’s nominees – so much so that it’s unusual to see someone get less than 80 per cent support.

Which is why the latest news out of Partners Real Estate Investment Trust is all the more surprising. After months of upheaval, the REIT sought shareholder support to nominate a new board of directors designed to steady the ship. At the vote last week, four appointees sailed through, garnering 97 to 98 per cent shareholder support, but one, Marc Charlebois, received only 46 per cent support.

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Could ‘CoCos’ start a frenzy of short-selling in a crisis?

ADRIAN MYERS

Last week, Royal Bank of Canada issued $1-billion worth of “non-viable contingent capital” bonds, known colloquially as NVCC bonds or, most enjoyably, as CoCos. Ideally, CoCos encourage investors to monitor banks for excess leverage. However, as new research by Jingya Li and Mark Reesor of the University of Western Ontario and Adam Metzler of Wilfrid Laurier University shows, if the conditions are right, CoCos may provide an incentive to cheat.

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Algonquin Power appeals to U.S. gas company shareholders

ANNA NICOLAOU

Gas Natural Inc. shares have spiked 25 per cent over the past week, to a record high of $12.85 (U.S.) Wednesday, as Ontario-based Algonquin Power and Utilities Corp. continues to push to acquire the company.

Algonquin Power has made three bids to buy Gas Natural, in January, March, and May. The company slowly pushed its offer price up from $10 to $13, all of which were at a premium to Gas Natural’s share price. But the acquisition target has swiftly rejected the “unsolicited and inadequate” offers, adding that it’s not for sale.

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Investment industry group recruits new chair

JACQUELINE NELSON

The Investment Industry Association of Canada (IIAC) is reorganizing its boardroom and adding new professionals to the mix.

In a recent vote held in Toronto, the association elected Sylvain Perreault, chief compliance offer at Desjardins Group, to be its chair. He will be especially focused on changing regulations affecting 160 member firms.

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Talisman isn’t scared of bidders, won’t rule out any assets

TIM KILADZE

The news that Repsol SA approached Talisman Energy Inc. about a deal shouldn’t surprise anyone. Hal Kvisle practically begged for deep-pocketed bidders.

Since implementing his strategic shakeup in 2013, Mr. Kvisle, Talisman’s chief executive, has told anyone within earshot that he would sell assets because he needs to right-size the company. Even though he favours some assets, he’s gone so far as to say that anything could be sold at the right price.

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FreshBooks receives $30-million in funding

ANNA NICOLAOU

FreshBooks CEO Mike McDerment has previously raised cash through friends and family, but has always shrugged off institutional venture capital money. Now he’s had a change of heart.

The 10-year-old Toronto startup that’s amassed more than ten million users is accepting funding for the first time. FreshBooks has raised $30-million (U.S.) in Series A funding led by Oak Investment Partners, with participation from Atlas Venture and Georgian Partners.

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CIBC’s ambitious plan to win in wealth management

TIM KILADZE

This much we know: Canadian Imperial Bank of Commerce is desperately trying to double down on wealth management, with executives going so far as to say they want 15 per cent of the bank’s bottom line to stem from this business.

What we haven’t heard are precise details on their plans to do so. Management has outlined broad strategies – focusing on the U.S., for instance – but there hasn’t been complete clarity.

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Kern Partners’ new fund backs LNG project

JEFFREY JONES

Kern Partners, the Calgary-based private equity firm, has started up a new, $750-million energy fund that is partly focused on moving a British Columbia liquefied natural gas project forward as a way to help open up Asian markets for Canadian gas producers.

The new Kern fund, its fourth and largest to date, is aimed primarily at investing in diversified energy exploration and development, employing the same investment philosophy as the previous ones. That involves five-to-nine year investments with companies led by established management groups. But energy infrastructure and technology are also part of the mix, executives said.

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Scrambling to get in, funders trip over each other’s turf

ANNA NICOLAOU

Venture capital and private equity, two historically distinct beasts, are overlapping more and more as the Canadian tech scene seems to be getting a makeover, according to BDC Capital industry veteran Dominique Bélanger. Private equity shops are getting into companies earlier and earlier, he says, while venture capital funds are making bigger investments in later-stage companies. Meanwhile crowdfunding and boutique VC firms have emerged as a viable financing option, democratizing the market.

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RBC’s global research team bulks up in U.S.

JACQUELINE NELSON

RBC Dominion Securities has been busy hiring this summer, particularly as it builds out its investment banking and research capabilities in the New York office.

The bank said Monday that it would hire two new managing directors to its global research group, which now has about 350 employees.

Danny Tenengauzer will be head of emerging markets and global foreign exchange strategy. He formerly worked at Standard Chartered Bank.

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Why Europe’s banks aren’t so scary

TIM KILADZE

The Canadian fund manager betting big on a European banking recovery isn’t cutting and running after the Portuguese tremors. He’s even more convinced that this is the time to buy.

In January Streetwise wrote about a new fund created by Hamilton Capital, designed to ride the recovery of Europe’s financial system. At its core, the investment thesis was rooted in fundamentals: economic growth was coming back and loan losses were falling.

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BMO hires co-head of U.S. industrials

ANNA NICOLAOU

Bank of Montreal is shuffling leadership of its U.S. investment banking teams, hiring a banker from Jefferies & Co. to co-head the industrials group.

BMO added Sean Sullivan as co-head of U.S. industrials, based out of New York and Chicago. Mr. Sullivan will eventually take over as sole head of the industrials team, replacing Scott Humphrey, who is switching to a U.S. investment and corporate banking role.

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EnerCare says takeover bid undervalues business

JACQUELINE NELSON

A possible $790-million dollar buyout for Canadian water heater giant EnerCare Inc. by its largest shareholder isn’t good enough, the company says.

Augustus Advisors LLC, the investment manager controlling a nearly 12-per-cent stake of the company, is leading an effort to acquire EnerCare’s business – a portfolio made up of 1.1 million water heaters and other devices installed in Ontario homes and rented to owners. Subsidiary EnerCare Connections Inc. also has metering contracts that measure electricity and water used in condos and apartments in Ontario, Alberta and other provinces.

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