Supercorp is dead, but the real existentential question is was it ever alive?
The Ontario government's idea of bundling together four big assets to sell them was only ever a possibility in the minds that run the Liberal government, and in that of Infrastructure Ontario president David Livingston, sources said.
From the moment the provincial government put out feelers for help from banks to get the deal done, the feeling in the financial markets was it would never work.
For starters, the assets - the province's power producer, the provincial liquor authority, the power grid and the lottery - had next to nothing in common.
Almost nobody likes conglomerates any more and they generally trade at a discount. Now take that conglomerate discount and add the fact that the government would be the majority shareholder, and subtract value to account for the market's view on government management (not flattering) and the political risk that the next government would come in and change course.
Then there was tax - sell more than a sliver and suddenly all those provincial cash cows become federally taxable.
These were killer issues for the pension funds that Ontario approached as potential partners. One by one, from Canada Pension Plan Investment Board to Ontario Teachers' Pension Plan to smaller players such as OP Trust, they said no thanks, sources said.
Add accounting, which Ontario Finance Minister Dwight Duncan acknowledged meant that the Liberal government couldn't use the proceeds on visible projects to make the Supercorp plan politically saleable, and the plan was a no-hoper.
The issues were highlighted by the banks that the province hired, casting a light on perhaps the smartest thing the province did in the whole process.
Ontario got advice from Goldman Sachs and Canadian Imperial Bank of Commerce, and under the terms of deals with the government for advice, the banks that give advice are usually prohibited from leading roles in any sale. That keeps the pressure to recommend a sale at any cost down.
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