Take one ambiguously worded press release, add a dash of Twitter and suddenly Canaccord Financial Inc. is investing in a $325-million arena project north of Toronto.
However, the truth is a little different.
The speculation started when Renaud Lavoie @LavoieRenaud of TVA in Quebec sent out a tweet to his almost 80,000 followers that "Canaccord and Jeffries LLC are ready to invest in the GTA Center in Markham. That way the city won't have to borrow $325M."
That's got to be a heart-stopper for any Canaccord shareholders who follow Mr. Lavoie. The investment banking and securities business is not so lucrative right now that firms have excess capital to be sticking into hockey arenas that don't yet exist, aimed at getting National Hockey League franchises that have yet to be acquired. Naming rights jump to mind, also, but given that Jefferies and Canaccord are fierce competitors and sharing naming rights to an arena would make little sense – imagine the Air Canada-American Airlines Centre.
In fact, Canaccord is advising the group that wants to build the GTA Centre as it looks to raise private funds so that the city of Markham won't have to borrow money. Canaccord and Jefferies are the types of places you would call to raise a bond deal or some other type of finance to enable developer GTA Sports & Entertainment to bring in the money privately.
However, it's easy to see how the confusion could arise, reading the press release from GTA Sports, which says only that "Two leading investment banking firms, Wall Street firm Jefferies LLC and Bay Street firm Canaccord Genuity have joined the GTA Centre team to support this new option."
From the looks of the release, Canaccord has been working on this deal for some time, with chairman David Kassie saying in the release that "Canaccord Genuity believes" in the vision for the GTA Centre and it conveyed that support of the idea to Markham area political leaders when they "came to our offices and met with me three years ago today."
(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)
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