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OMERS' hostile offer expected to ignite Teranet bidding war

ANDREW WILLIS AND LORI MCLEOD

From Friday's Globe and Mail

Latest comment posted at 2:06 AM EST 05/09/08

Income fund decries OMERS infrastructure arm for not participating ‘in the process that Teranet has established' ...Read the full article

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  1. Lie Detector from Parry Sound, Canada writes: Another good income trust being bought by a tax exemt pension fund. More tax leakage caused by Flaherty! Holders of Teranet units were paying high levels of taxation. OMERS will pay none. Flaherty argued without ever proving it that income trusts were causing tax leakage. His proof was 18 blacked-out pages. Well it is Flaherty's senseless destruction of income trusts that causes tax leakage. This is quite a minister of Finance we have! He sees leakage where there is none and he does not see leakage where there is some!
  2. Patriots in 2008 from Toronto, Canada writes: There's a fire sale out there right now for pension funds and private equity to snap up the remaining business income trusts on the cheap... All because of our government's stock market bungling. So, now our good Canadian companies are all getting taken out of public hands, meanwhile our public (tax) money is being doled out to support American companies like Ford & GM. It's got to be a conspiracy that Harper's Conservatives are intentionally trying to make Canada the 51st State.
  3. Thames Sailor from Ontario, Canada writes: Without making any comments about Mr. Flaherty, (I have some but you never know who might be reading) with income trusts so depressed right now, I'm thinking a good investment strategy might be to cruise through the list, buy some of the ones that have the actual income to make their current payments. In some cases you'd be picking up between 8 and 12 per cent in payouts, usually on a monthly basis, then as we get closer to the deadline, someone comes in a buys, at what is a bargain for them, but a premium for the new buyer. If you have owned them before the deadline you are still likely under water, but it might be a way to recoup some of the money.........in the meantime the few I owned before Mr. Flaherty spoke I'm hanging on to because the monthly income counts for something. Any comments?

    Cheers
  4. Arijit Banik from Toronto, Canada writes: No arguments; I am not a fan of Jim Flaherty. But wasn't Mark Carney the Mandarin whose recommendation was the major thrust behind the income trust decision?
    Teranet is a poorly managed business and while it had the potential to be a global player it did nothing. Taking this thing private is the right move.
  5. R M from Ottawa, Canada writes: 2 billion for a biz with annual revenue of 200 million?

    Sounds high.

    As far as Flatulent Flaherty, the way to get rid of him is to dump Harper. "2 bird-brains with one vote"
  6. Patriots in 2008 from Toronto, Canada writes: To the Thames Sailor. Every investor wants to own a stock that will be taken private at some premium to the trading price. But using that as an investment thesis is a mug's game - it's more like gambling than investing. If you want to take a guess at which business is going to be bought out and which ones are left to die a slow death - well, you may as well just go and bet on blackjack or texas hold 'em at your nearest casino.
  7. gil bert from Calgary, Canada writes: Fair price for Teranet.

    Teranet has a distribution of $0.81 / year.

    Teranet has a 9 year agreement with the Ontario.

    9 x $0.81 = $7.29 of distributions. Let say we split this with OMERs:

    $7.29 / 2 = $3.65 $10.00 (Teranet IPO) = $13.65 take out price.

    OMERs gets a distribution of $0.81 / $13.65 = 5.93% yield.

    The 10 year BOC bond yields 3.48%.

    Most investment grade corp. bonds yields below 6%.
  8. Closely Watching from Canada writes: The Real Tax Losses caused by Flaherty's ill advised attack on Income Trusts are incredible. Look at the losses in Tax Revenue from the BCE takeover alone. The LBO's continue while Flaherty stubbornly refuses to listen to factual evidence. He no longer talks about tax leakage. Now Flaherty hides behind statements like "it's the law"... Flaherty said that on BNN the other day when asked if he could extend the transition period for energy trusts. Let me get this right...Harper can break his Good Election Timing law because it suits his purposes but no one can fix a Bad Income Trust Law? Do the laws of Canada only apply to the People of Canada and not to the Prime Minister? CRAP (Conservative Reform Alliance Party) is full of CRAP.
  9. Gardiner Westbound from Canada writes:
    Notwithstanding the Harper government has done a superior job and deserves reelection, I do hope Flaherty gets the heave-ho.
  10. Joe Blow from Canada writes: How did this one slip throught - "There are other provincial land registry systems it could also look at working with, and additional avenues for growth it won't discuss at this time, Mr. Byers said." Name one other "provincial land registry system" ..... can't do it? Maybe it's because there isn't one.
  11. R M from Ottawa, Canada writes: Gil Bert:

    NICE spin you (tried to) put on that one.....forgetting only minor things, like the time value of money! Giving equal present value to 9 years of future distributions? Don't think so.....

    NOT a good deal; they paid way too much. Half would have been rich.

    Good try, though.
  12. Hung Long from Hong Kong writes: In Florida the property registry is available for free public online access. Ontario has granted an exclusive franchise to a private company, Teranet, which then can charge to access these public documents. Public files should be freely available, or if there is to be exclusivity, any franchise should be awarded to the highest bidder.
  13. john may from writes: Joe Blow- there is a provincial land registry system in Nova Scotia, all of it on line buy it costs.
  14. Antonio San from Canada writes: This is legal confiscation of assets to the profit of the 30% Canadians who have a defined benefit plan while the 70% of Canadians who don't won't be able to invest in these assets. Flaherty=Harper=distrust and by the way, Dion won't help ITs either, just watch!
  15. TERRI R from Kimberley, Canada writes: Well we can vote the Conservatives/Liberals/New Democrats in and this will not change, they all believe in the free market and that business can run a country better than politicians.
    Look how well that has worked in the United States, absolutely no oversite because business is policing business.,
    Privatization is the single largest contributor to stagnant economies, funded by our taxpayer dollars without any recourse as there is no ethics or accountability on the part of these private corporations to our elected representatives or we the taxpayer. Under the Security and Prosperity Partnership we will see an end to" rule of law or law of the land."
  16. Johny doe Jr from Canada writes: I find it a conflict of interest that the Land registry system will be owned by the people who have direct or indirect ownership. Who will protect the public interest from the bureaucracy? They can make all kind of rules that will require providing land records, they can increase the fees, etc....
  17. Bruce Carwardine from Canada writes: Was not this the entity sold by the PC's Harris (half) and then completely by the Libs Dalton? Another profitable piece of infrastructure like the 407 taken out of public hands for short term gain.OMERS would not be after this if it was not going to return pantloads.
  18. dominic costanzo from Canada writes: Why can a pension fund own an income trust and I as retail investor cannot?Is this the tax fairness plan?Tax leakage started on Oct 31 2006 due to the decision to tax income trusts.
  19. bob gervitz from United States writes: Patriot writes: "Every investor wants to own a stock that will be taken private at some premium to the trading price."

    Well not this investor. Patriot's plan is the way to small profits and capital gains taxes. I would far prefer to collect increasing dividends for the next 30 years (plus a huge cap gain then) than reap a one time 25% premium now, and then need to choose another stock to start the short-lived process all over again.

    The bigger question for me is this: Is anyone else getting the least bit concerned that pension funds, etc. are denuding the landscape of businesses for the private investor (like me) to invest in? At the moment PFs are primarily focused on the fire-sale of income trusts that have been mortally wounded by that idiot Flaherty (and, yes, his idiot adviser Carney). Once all (or virtually all) the income trusts are gobbled up along with a goodly number of larger companies (eg. Bell), what is left to pay taxes.

    That pension funds and private equity pay far less in taxes than the income trust investors and public corporations would is one thing (and a pretty important thing at that), but what about having something to invest in. Between the death of ITs, rise of private equity, pension funds and foreign takeovers (eg. INCO), what has Canada got left in the way of a thick, profitable, diversified investment base. Not much!
  20. Conservative for lower taxes, cheaper gas, less government from Canada writes: Pension plans are just becoming big tax heavens that suck the blood out of the economy and force the non pension sectors into carrying a bigger load.
  21. Howard Beale from Canada writes: You are about twenty years too late to worry about pension funds and their huge tax deferral.

    The baby boomers are about to retire. Those with the gold plated government pensions are about to start drawing down pension assets big time. Given the size of their pensions expect government coffers to swell as a lot of the drones will be in high tax brackets.

    Ditto for the RSP crowd. If they have anything left when the market spits them out, they too will be cashing in and paying some of the tax they deferred .
  22. bob gervitz from United States writes: Howard Beale writes: "You are about twenty years too late to worry about pension funds and their huge tax deferral."

    Yes, of course I am too late Howard (although you should know that I also worried about it 20 years ago), but isn't it interesting how the tax deferral related to RSPs and Pension Plan payments to retirees is o.k. (indeed, that is inherent to their design), at least with that prize buffoon Flaherty, yet the tax deferral (typically of much shorter duration) which is ALSO the essence of Income Trusts isn't. And that's despite the huge difference in the amount of money involved (i.e. RSPs and pension amounts are colossally larger than Income Trusts ever were).

    Go figure!

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