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A minority shareholder has become claiming that Corus Entertainment Inc. is paying up to $858 million more than it ought to to acquire related company Shaw Media Inc. and it has proposed some new terms that it says it would be willing to accept. 

Corus minority shareholder urges regulators to examine ‘serious’ disclosure concerns in Shaw Media deal

Two market regulators have been urged to review whether enough information about Corus Entertainment Inc.’s proposed $2.65-billion acquisition of Shaw Media Inc. continues to be publicly disclosed to allow minority shareholders to make an educated decision

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In a presentation released Thursday, Catalyst Capital Group Inc. said that Corus could increase the need for its minority shares by between 23 and 107 percent, or up to $10.50 a share, whether it decided to renegotiate the relation to its proposed $2.65-billion transaction, which is for $1.85 billion in cash and $800 million in stock.

Catalyst had initially calculated that Corus was overpaying for Shaw Media by as much as $600 million, including synergies, in a presentation it made to Corus management on Feb. 16. In the new valuation, the private equity firm employs a lower adjusted multiple to measure Shaw Media’s enterprise value.

Corus disputed the $600-million you’ll need Tuesday and pointed out that Catalyst had originally asserted Corus overpaid by as much as $200 million. “Catalyst’s internal calculations on the fair value for Shaw Media seem to be based on flawed and ill-informed assumptions which are simply not credible,” it declared.

In an e-mail Thursday, Corus spokeswoman Sally Tindal said the Shaw Media deal was heavily negotiated over a period of 4 months using special committees, adding that two separate fairness opinions were considered. Both deemed the purchase price of $2.65 billion to become fair.

In a study note published Wednesday, analysts at Canaccord Genuity questioned the claims being produced by Catalyst and wondered whether they would have any affect on the shareholder vote.

“We are unclear of Catalyst’s motive at this time and wonder if its arguments will hold much sway with Corus’ public shareholders,” the note stated. They wrote that Corus paying “a modest premium valuation” for Shaw Media “appears justified” since Shaw Media is posting flat-to-modest declines in organic earnings before certain costs (EBITDA), whereas Corus’ results have been falling within the mid-to-high single digits.

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Catalyst, a private equity finance firm that focuses on distressed situations, is also taking problem with how Corus intends to finance the offer, and it is suggesting that the company issue fewer shares to reduce dilution and declare a unique dividend, among other requests.

Catalyst is asking that Corus reschedule the Mar. 9 special meeting and publish a revised circular that contains “full and clear disclosure of all material facts that have not been provided in the present circular so they can make an educated decision,” the company said in a statement.

While this is usually a good deal for that Shaw family, it’s a bad deal for every Corus minority shareholder.

The bulk from the voting shares of Corus and Shaw are controlled by JR Shaw through the Shaw Family Living Trust. Since this deal is between related parties, Corus requires the approval of at least half of the votes cast by its minority shareholders. Last week, Catalyst urged two securities regulators to examine whether enough information had been disclosed to investors, especially that it believes the Shaw family stands to gain a minimum of $50 million as a result of its controlling interest in both companies.



“Although this may be a good deal for that Shaw family, it’s a bad deal for every Corus minority shareholder,” said Gabriel de Alba, Catalyst’s md and partner. “Catalyst has asked Corus simple questions on behalf of all shareholders, simply to be met with secrecy and a good flow of misleading information.”

De Alba said that “the rate where they’re trying to push through this transaction” is reason to be concerned. This deal was announced close to a month after Shaw decided to acquire Wind Mobile Corp. for $1.6 billion.

Corus also said Thursday that it’s postponing its proposed high-yield debt offering “until market conditions improve.” Corus planned to raise as much as $300 million in bonds to exchange some of the other committed credit facilities associated with the transaction, which still remain in place. Sources state that the bond market was demanding terms for this offering that exceeded the amount Corus was prepared to pay. 

Class B shares of Corus fell 0.7 percent Thursday to $9.87. Since Corus announced the acquisition on Jan. 13, its stock has plunged 16 per cent and today trades at a 56 per cent discount to the 52-week high it reached last February. Its quarterly dividend of nine cents per share is yielding a lot more than 11 percent.

WINNIPEG/CALGARY – Canadian farmers are cashing in around the highest vegetable prices in years, helped through the country’s weak currency and soaring costs of U.S. imports which have renedered them unexpected winners inside a bearish commodity world.

Pricey vegetables sending more consumers to freezer aisle: Metro CEO

In the era of $10 cauliflower, food price inflation has been driving Canadians in to the frozen food aisles, according to the CEO of grocery chain Metro Inc.

Continue reading.

Soft wheat and canola prices may diminish Canadian farm incomes by 9 percent this year. But it is the very best of times for carrot and beet growers, a part of a distinct segment industry best-known for stocking farmers’ markets.

“Per acre, there’s nothing that can compare with it right now,” said Sam Hofer, who grows carrots at Dinsmore, Saskatchewan. “You can make good pocket money off 50 acres (20 hectares) of land.”

At Emile Marquette’s farm near Perigord, Saskatchewan, his 20 acres of beets would bring 10 times more net gain per acre than canola. That’s due to beets’ higher output per acre in addition to sky-rocketing prices.

The year ahead looks to have “huge potential,” Marquette said.

Fresh vegetable and fruit prices jumped 18 and 13 per cent respectively in January annually, statistically Canada.

The price of imported U.S. produce has spiked because the Canadian dollar, now trading around 74 U.S. cents, fell 16 percent this past year. Excessive rain in some U.S. regions has added costs.

Marquette is part of a grower group that sells vegetables to Saskatchewan-based Federated Co-operatives Limited. The growers and co-op set price increases for 2016 of five to 10 % on local produce that already fetches a premium.

It is a modest top-up, given store prices, but Marquette said farmers want to nurture demand.

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Marquette is expanding beet plantings by one-third, or five acres, claiming much more of his canola field.

Vegetable plantings in Saskatchewan may grow by up to 10 per cent this season, said Bob Purton, president of Saskatchewan Vegetable Growers’ Association.

Purton sells his tomatoes and cucumbers to farmers’ markets and expects the best prices of his 15 years growing vegetables.

In Alberta, carrots’ value topped $5.4 million last year, the highest since 1997.



In Ontario, demand should increase for Canadian apples, peaches and berries from retailers including Loblaw Companies Ltd, Sobeys Inc, Wal Mart Stores Inc and Metro Inc, said John Kelly, executive vice-president of Ontario Vegetable and fruit Growers Association.

The low Canadian dollar could also spur fruit exports to the Usa, he explained.

Federated Co-op has steadily bought more from Saskatchewan farmers in recent years. However the dollar’s slump has added to the urgency, said Mike Furi, manager of procurement and pricing at Federated’s subsidiary, The Grocery People.

Canada’s second-largest grocery chain Sobeys said it can also be buying more from Canadian farmers. Sobeys is hiring four “local developers” in Alberta and British Columbia, whose mission is to find local farmers and vendors.

High grocery prices have ebbed, but another shock might be available, Furi said.

Excessive rains and fluctuating temperatures in California and Florida may tighten supplies of celery, cauliflower and cabbage in March and April, spurring more interest in Canadian produce, Furi said.

“As much as they can grow, we can take.”

? Thomson Reuters 2017

Goldcorp Inc. slashed its dividend and lowered its production guidance for the following 3 years on Thursday as the company tries to maintain a strong balance sheet and faces unexpected problems in an Ontario project.

The stock dropped 13 per cent on Friday in reaction towards the news, closing at $18.73 in Toronto. It had been the worst performer among people in the Bloomberg Americas Mining Index.

The Vancouver-based mining giant moved from a monthly dividend of 2 US cents a share to a quarterly dividend in the same level, effectively reducing the annual payout by two thirds. Goldcorp said this lowered dividend still offers a “competitive” yield, while allowing the organization to invest in its growth projects.

One of these growth projects has already been facing major challenges. Goldcorp removed the Cochenour project from the production guidance for the next 3 years and said the project is re-entering the “advanced exploration” phase.

Cochenour, in Ontario’s Red Lake camp, was supposed to start producing gold last year. But Goldcorp ran into unexpected geologic issues underground that delayed development. By moving the troubled project all the way back to the exploration stage, Goldcorp effectively told the market that there’s still lots of try to do.

Another negative surprise was the Los Filos mine in Mexico, where Goldcorp shrunk the mine life because it moved 5.3 million ounces of low-grade material from its reserves.

With Cochenour out of production guidance, it was not surprising the overall forecast dropped. Goldcorp said it expects to produce between 2.8 and three.A million ounces of gold a year in every of the next 3 years. Previously, the company forecast as much as 3.Six million ounces in 2016, as much as 3.7 million in 2017, and up to 3.4 million in 2018.

“As the new production guidance is disappointing, to all of us it appears grounded in reality,” TD Securities analyst Greg Barnes said in a note.

For the fourth quarter, Goldcorp reported an adjusted loss US$128 million, or US15 cents a share, along with a monster net loss of US$4.3 billion because of impairments. However, the company said it generated free cash flow of US$239 million in Q4 as it produced 909,400 ounces of gold at all-in sustaining costs of US$867 an ounce (excluding inventory impairments).

“In annually marked by continued metal price volatility, we achieved three successive quarters of free income generation as a result of continued focus on lower costs and better margins,” chief executive Chuck Jeannes said inside a statement.

Going forward, Goldcorp hopes to boost production through brownfield expansions at a number of of their mines. The company said these expansions are low risk and provide high rates of return. Barrick Gold Corp. is undertaking a similar strategy.

Gold prices have rallied so far in 2016, and Goldcorp’s stock price is up nearly 35 per cent. Jeannes said the company is “encouraged” by the rally and is “well positioned for future success.”

This was the last quarterly earnings report Jeannes will oversee as CEO. He’s retiring and passing the reins to David Garofalo, who joined the organization from HudBay Minerals Inc. Garofalo gets control as CEO on Monday.

pkoven@postmedia.com

Twitter.com/peterkoven

WASHINGTON – U.S. economic growth slowed in the fourth quarter, but not as sharply as initially thought, with businesses less aggressive in their efforts to reduce unwanted inventory, which could hurt output within the first 3 months of 2016.

Gross domestic product increased at a 1.0 percent annual rate rather than the previously reported 0.7 per cent pace, the Commerce Department said on Friday in its second GDP estimate.

Economists polled by Reuters had expected that fourth-quarter GDP growth could be revised down to a 0.4 per cent pace. The economy grew at a rate of 2.0 percent in the third quarter and expanded 2.4 percent in 2015.

U.S. stock index futures extended gains after the data, while prices of Treasuries fell. The dollar added to gains against a basket of currencies.

 

Businesses accumulated US$81.7 billion worth of inventory within the fourth quarter as opposed to the US$68.6 billion reported last month. The largest contributors towards the upward revision to inventory investment were retail trade and mining, utilities and construction.

As an effect, inventories subtracted only 0.14 percentage point from GDP growth rather than the previously reported 0.45 percentage point.

The bigger inventory build is bad news for first-quarter GDP growth because it means businesses will have little incentive to place new orders, which will continue to hold down production.

“The weaker drag from inventories within the fourth quarter means that any rebound within the first quarter could be a little more modest than we previously expected,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

“Nevertheless, it still appears that first-quarter GDP growth is on track to rebound to some very healthy 2.5 per cent annualized or more, that ought to dampen any concerns a good imminent recession.”

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DOWNSIDE RISKS

First-quarter GDP growth estimates are as high as a couple.5 percent rate, however the risks are tilted towards the downside amid slowing world economies, a powerful dollar and a recent global stock market sell-off that has tightened financial market conditions.

Cheap oil has also been a continue the profits of oil field companies for example Schlumberger and Halliburton, prompting them to slash capital expenditure budgets.

The upward revision to fourth-quarter GDP growth also reflected a smaller trade deficit than initially thought as imports contracted. The trade deficit subtracted 0.25 percentage point from GDP growth instead of the 0.47 percentage point reported recently.

Business paying for equipment contracted in a less steep 1.8 percent rate last quarter, when compared to previously reported 2.5 percent rate.

There was a small downward revision to consumer spending, which accounts for a lot more than two thirds of U.S. business activities. Consumer spending rose in a 2.0 percent pace as opposed to the 2.2 per cent rate reported recently.

Unusually mild weather hurt sales of winter apparel in December and undermined demand for heating. But you will find signs consumption acquired in January with the return to more normal winter temperatures.

With gasoline prices around US$2 per gallon, a tightening labor market gradually lifting wages and house prices boosting household wealth, the basic principles for consumer spending remain quite strong.

Business paying for nonresidential structures contracted in a 6.6 percent rate as opposed to the 5.3 percent pace reported recently. Government spending contracted at a 0.1 per cent rate rather than rising in a 0.7 per cent rate.

? Thomson Reuters 2016

A consortium led by Ontario Teachers’ Pension Plan Board and Borealis Infrastructure won antique dealer war to purchase London City Airport for about 2 billion pounds (US$2.8 billion), based on people acquainted with the problem.

The group beat an adversary bid from China’s HNA Group to get the facility from Global Infrastructure Partners, the person said, asking not to be recognized as the deal isn’t public. Cheung Kong Infrastructure Holdings Ltd. had also been thinking about bidding, people acquainted with the problem said Wednesday.

Representatives for GIP and Teachers’ declined to comment, while a representative for Borealis didn’t react to a request comment. An official for HNA Group couldn’t be reached for comment beyond regular business hours.

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The winning bid was reported earlier by the Financial Times.

The airport, located about 6 miles (10 kilometres) from London’s financial district and opened later, was acquired by American International Group Inc. and GIP in 2006. At the time, news reports said the businesses agreed to pay 750 million pounds ($1.04 billion), though terms weren’t disclosed. Two years later, American International sold its stake to GIP and Highstar Capital, which now owns 25 %.

The Canadian-led group will have to be prepared for a political conflict that stands in the way of a planned expansion that will help City serve 6.5 million passengers annually by 2023. London Mayor Boris Johnson vetoed a 250 million-pound plan to add aircraft stands, an arrivals terminal and taxiway last year.

London City Airport handled a record 4.32 million passengers in 2015, 18 percent at least a year earlier, despite the size of aircraft limited by its short runway and noise- curtailment rules requiring steep takeoffs and landings. London Heathrow, Europe’s busiest airport, moved 75 million travelers.
Bloomberg.com

TORONTO – Ontario Finance Minister Charles Sousa announced Thursday that the province’s budget deficit has shrunk a lot more than expected and that the Liberals take presctiption pace to return to a balanced budget by 2017-18, even as net debt is set to increase for the reason that timeframe.

Highlights from the 2016 Ontario budget

By Keith Leslie
Finance Minister Charles Sousa delivered the Ontario budget on Thursday. Here are a few from the highlights:

The budget deficit for fiscal year 2015-16 is anticipated in the future in at $5.7 billion, down in the last estimate of $7.5 billionThe deficit for 2016-17 is projected in the future in at $4.6 billion and become reduced to zero the following fiscal yearOntario’s net debt will hit $308 billion in 2016-17, the biggest of any sub-national jurisdiction in the world, costing $11.8 billion in interest payments, that will increase to $13.1 billion by 2018-19Income from the cap-and-trade intend to battle climate change is anticipated hitting $1.9 billion in 2017, up from last year’s projection of $1.3 billion
University and college tuition will be free for students from families with incomes of $50,000 or less, and most 1 / 2 of students from families with incomes up to $83,000 will get non-repayable grants that exceed the typical tuition – mostly students who survive their ownThere is a $3 increase in the cost of a carton of 200 cigarettes, effective at 12:01 a.m. Friday, and also the tobacco tax could keep rising at the rate of inflation each year within the next five years.The minimum price for a bottle of wine rises to $7.95, there is a number of increases in the LCBO’s mark-up on wine, starting with a two percentage point hike in June – about 10 cents a bottle – accompanied by another two percentage points in 2017 and 2018, with a one-point hike in 2019There may also be annual increases of about 10 cents within the tax on wine sold in private stores, increasing from 16.1 cents to 20.1 cents over four yearsThe $30 fee for Drive Clean vehicle emissions tests is going to be eliminated in 2017-18, although not the tests themselves, that will cost the province $60 million a yearHospitals can get their first funding rise in 5 years, up $345 million, plus $12 billion over Ten years in capital grants for around three dozen major hospital projectsSingle seniors earning as much as $19,300 each year is going to be eligible for cheaper drugs starting in August, compared with the prior threshold of $16,018. Couples by having an income of as much as $32,300 may also be eligible, where before only those earning $24,175 qualified. The costs will be offset by raising deductibles and co-payments for seniors above the new income thresholds. Annual deductibles will rise to $170 from $100 and co-payments will increase with a dollar to $7.11There will be $333 million over five years to revamp and improve autism servicesShingles vaccines for seniors, which cost $170, will be free.

The Canadian Press

Sousa asserted the deficit has become down in the $7.5 billion projected after this past year to $5.7 billion, as stronger economic growth in Ontario boosted government revenues. The budget forecasts that Ontario’s economy grew 2.5 percent in 2015, a significantly stronger level compared to 1.2 per cent forecast for the national economy.

Ontario’s deficit will also be helped by $1.1 billion gained from the sale of Hydro One, as well as growing cash injections in the authorities, that will hit $24.6-billion this year and rise to $26.6-billion by 2018.

But net debt goes up as the government continues to borrow to fund projects, including a massive $160 billion infrastructure project within the next 12 years. Net debt is set to increase to $326.8 billion in 2018-19, from $296.1 billion in 2015-16, even as the Liberals are set to possess a balanced budget by then.

The projection that Ontario’s debt will continue to rise and that debt-to-GDP will continue to hover near 40 per cent in the medium-term won’t thrill debt rating agencies. Standard & Poor’s downgraded the province’s debt last year, while others such as Moody’s Investors Service have placed an adverse outlook on provincial bonds.

Sousa dismissed the idea of further debt downgrades, however, saying a declining debt-to-GDP ratio could be welcomed.

“In my opinion credit agencies are going to look at this budget and understand that we’re achieving what we should said we’re going to do,” he said throughout a news conference.

The government has said it has a target of reducing net debt-to-GDP to the pre-recession degree of 27 per cent, although it gets no where near to that level in its projected forecast, with net debt-to-GDP hitting 38.5 in 2018-2019. The ratio is expected to peak at 39.6 per cent in 2015-16, remain level in 2016-17 and just begin to decline in 2017-18.

The government is projecting that total revenue in 2015-16 is going to be $2.2 billion greater than the 2015 budget had factored in, due to “higher asset optimization” and much more tax revenue as a result of a greater Ontario economy.

“I believe your budget is a huge part of the right direction,” said Douglas Porter, chief economist at BMO Capital Markets inside a phone interview. “The deficit targets were a substantial step away from the $10 billion deficits of past years.”

Patrick Brown, leader of Ontario’s Progressive Conservatives, said he cast doubt on the Liberals having the ability to go back to a balanced budget by its target date and warned that the budget was raising costs on Ontarians.

“The truth is taxes ‘re going up,” he explained.

Total government expenses within the upcoming fiscal year will be $0.2 billion higher than forecast within the 2015 budget. Program expenses is going to be $0.4 billion higher, but unchanged from the call produced in the 2015 Ontario Economic Outlook and Fiscal Review late last year. The increase in expenses is usually because of the Green Investment Fund, which includes a $325 million down payment aimed at reducing greenhouse gas emissions

The government is projecting a budget deficit of $4.3 billion in 2016-17, and balanced budgets in 2017-18 and 2018-19. The 2016-17 deficit projection is definitely an improvement of $0.5 billion when compared to forecast in the 2015 budget.

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The Liberal budget is obtaining a revenue boost from an Ontario economy that’s gaining steam. The province boasts one of the fastest growth rates in Canada, and Statistics Canada noted that 100,000 new jobs have been created there in the past Twelve months.

A weak loonie and low oil prices are helping manufacturers increase as exports become competitive again.



“They’re getting the aid of the subtle underlying improvement in the Ontario economy,” Porter said. “They’re also being helped by steady downdraft in low borrowing costs and debt service charges, which continue to flow to the main point here.”

“Spending restraint, unfortunately, was not just like advertised previously,” he added.

Real estate and construction continue being two biggest contributors to gross domestic product, though economists are increasingly worried about the red-hot Toronto housing industry, which is becoming a disproportionately large number of the economy.

Sousa noted that Ontario’s stronger economy is essential to balancing the budget.

“We have improved revenues from – the development in our economy and housing too,” he said.



And while debts are going up, the government said that it has reduced its risk to rate volatility by issuing long-term debt and locking in rates. The average rate of interest Ontario pays on its debt has declined from 10.9 per cent (on a weighted-average basis) to an expected 3.6 percent by March 31, 2015.

About $53 billion worth of bonds issued since the beginning of fiscal 2010-11 have been with terms longer than 30 years. The weighted-average term to maturity of long-term provincial debt issued has gone from 8.1 years in 2009-10, to 14 years in 2015-16.

Ontario is forecast to invest $11.2 billion servicing its debt in 2015-16, $210 million lower than forecast in the 2015 budget as a result of lower rates. But as debt rises, so will rate of interest payments, which are set to develop to $11.756 billion in 2016-17 and also to $12.453 billion in 2017-18.

With the oil industry weakened by a war over share of the market, global investment in alternative energy is setting new records, according to a brand new report that boasts: “While fossils crash, clean energy soars.”

The exception is Canada, where purchase of renewable energy plummeted 46 per cent in 2015 compared to 2014, to some paltry US$4 billion, even while Canadian governments were rushing to promote and subsidize clean energy.

In comparison, Canada’s oil and gas industry investment was forecast at $45 billion in 2015, down nearly 40 percent from $73 billion in 2014. In Alberta’s oilsands alone, 2015 capital investment was forecast to become lower by almost another, to $23 billion, when compared with $33 billion in 2014, based on the Canadian Association of Petroleum Producers.

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The 16-page Clean Energy Canada report, released Monday, said Canada is lagging on alternative energy because it has a patchwork of provincial renewable power policies that haven’t produced long-term certainty.

“The country has additionally experienced a lack of overarching federal policy support: pipelines trumped power lines as a national priority,” the group, affiliated with Burnaby, B.C.-based Simon Fraser University, writes in the report.

“But there is good news late in 2015 – Alberta and Saskatchewan both announced targets to improve their manufacture of renewable power, and the newly elected federal government has indicated that getting good clean energy around the grid is a priority.”

Prime Minister Justin Trudeau, provincial premiers and aboriginal leaders are meeting in Vancouver this week for discussions on the pan-Canadian framework to satisfy greenhouse gas reduction emissions commitments made in Paris in December included in a brand new global agreement.

The framework will develop actions already taken by provinces and territories, to ensure that Canada can meet – or exceed – its climate commitments, Trudeau said inside a Feb. 10 statement.

Clean Energy Canada, which fits to accelerate the transition to renewable energy, said an unprecedented US$367 billion was invested globally in renewable power in 2015, and the Paris commitments will boost its momentum.

“Turmoil in fossil fuel markets led many analysts to suggest clean energy investment would similarly stall out,” executive director Merran Smith said within the report.

“How could alternative energy possibly compete with cheap oil, gas and coal? But clean energy did compete, also it won. Once again, more income flowed into new renewable electricity than new power from fossil fuels.”

The group says clean energy costs are coming down as production and experience increase.

In the U.S., it says, the unsubsidized technology price of wind energy originates down 61 per cent since 2009, and utility-scale solar photovoltaic is down 82 per cent, thanks to improved efficiency minimizing costs of components like panels, inverters and turbines.

The top investors in renewable energy in 2015 were China (US$110.5 billion), the U.S. (US$56 billion) and Japan (US$43.6 billion). With only US$4 billion invested, Canada was in eight place.

Globally, the renewable energy sources of preference were solar (US$161 billion), wind (US$110 billion) and enormous hydro projects (US$42 billion).

“These global trends have to be on the radar of Canadian business and political leaders, simply because they paint an image of great opportunity,” Smith said in the report.

“There will continue to be markets for the fossil fuel helpful information on serious amounts of come, however their future is increasingly uncertain. It’s clear where the puck goes.”

ccattaneo@nationalpost.com

TORONTO/MONTREAL – Dream Office Investment Trust is working with TD Bank and CBRE to sell 1 / 2 of its stake in Toronto’s Scotia Plaza, Canada’s second tallest business building, based on two sources familiar with the matter.

The potential sale comes about 4 years after Dream Office REIT, then called Dundee REIT, acquired two-thirds from the Two million square-foot Scotia Plaza complex. H&R REIT bought the rest of the stake at the time. The $1.3-billion deal marked the greatest price ever paid for a Canadian business building.

Dream Office has become looking to sell half its stake, leaving Scotia Plaza potentially in the hands of three different owners with equal positions, based on the sources, who requested anonymity because the matter is not yet public.

Under a possible arrangement, Dream could seek to retain management control, one of the sources said, adding that it would depend around the outcome of the ultimate deal terms with the buyer.

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Strong interest is expected from foreign buyers and Canadian pension funds, the sources said.



The news may come as a significantly weaker Canadian dollar is attracting increasing attention from global investors seeking an alternative choice to tumultuous equity markets.

Scotia Plaza is incorporated in the midst of great renovations in recent months, though it is not clear if they’re associated with the potential sale.

As part of a recently announced strategic plan, Dream Office said hello looks to market non-core assets worth $1.2 billion over the next three years.

Dream Office Chief Executive Jane Gavan did not immediately respond to an e-mail requesting comment. TD declined comment, and CBRE didn’t immediately react to a request comment.

Dream Office shares lost 31 percent of the value last year, largely due to concerns about its large contact with the Alberta market, that has been hit by the oil price collapse.

This year Dream shares have gained nearly 14 percent, helped through the announcement about selling assets.

? Thomson Reuters 2016

HOUSTON – Prices for mansions in Houston’s swankiest neighbourhood have tumbled in lock step with crude prices. The Houston Opera has offered free season tickets to patrons who lost their jobs in the oil bust. An expensive restaurant offers cut-price dinners.

There’s somewhere OPEC can’t broker an oil deal: The fracking heartland of Texas

Saudi Arabia and Russia took the initial step to stem the slide in oil prices. There’s just one problem: If they’re successful – and that’s a big if – the wildcatters of Texas, Oklahoma and North Dakota are waiting to pounce.

Continue reading.

Twenty months in to the worst oil price crash since the 1980s, well-heeled residents from the world’s oil capital are among the hardest hit largely because tanking energy firm shares constitute a lot of gas and oil executives’ compensation.

In River Oaks, a neighbourhood of palatial mansions and lush gardens, the average sales cost of a home has tumbled to US$1.3 million from US$2 million in the middle of 2014 when oil began its more than 70 percent slide, according to data from the Houston Association of Realtors and Keller Williams. Median property prices in the area have previously fallen further in this downturn, which isn’t yet over, compared to 16 per cent stop by the previous oil slump in 2008 and 2009.

“When oil does well, River Oaks does well. When oil does bad River Oaks does bad,” said Paige Martin, a Keller Williams broker which specializes in the neighborhood. “Not everybody can afford a US$10 million house.”

City-wide data also show that while overall sales of single family homes fell 2 per cent in January, sales of these priced over US$500,000 tumbled 9 percent. The overall median house price was US$200,000, up 5 percent on the year, based on the realtors’ association.

While Houston’s economy is much more diversified now than in the 1980s once the city lost 13 percent of their jobs, it remains home to 5,000 energy-related firms and also the fortunes of gas and oil executives are tied more than ever before towards the energy market.

Since U.S. lawmakers passed legislation in 1992 encouraging “performance-based” pay, the proportion of investment in executive compensation has steadily increased, said David Bixby, head of the Houston office for Pearl Meyer compensation consultants.

“Now, you’re looking at 70 to 80 percent of CEO compensation in stock typically for oil and gas companies,” he explained. “They are going to be exposed to commodity price cycles.”

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ACROBATS As well as for SALE SIGN

For example, former oil executive, Kolja Rockov, whose extravagant wedding with dancers and acrobats was a local online sensation 3 years ago, briefly put his unfinished mansion available on the market for US$6.9 million, based on listings.

A Jan. 21, 2015 SEC filing showed he involuntarily sold 239,000 shares from the company’s tanking stock he’d used like a collateral for a loan. Rockov lost his job as Linn Energy LLC’s CFO in August.

Rockov said the house is actively being built, isn’t for sale, and the man left his job by mutual consent. A Nov. 5 SEC filing said he was “terminated without cause.”

Luxury car sales will also be slower in Houston than in other areas of the state and also the country.

“If you’re employed by an energy company, the thing is all this stress who are around you, it might nick your purchase confidence, even if you’re fairly high income,” Earl Hesterberg, chief executive of Houston-based Group 1 Automotive Inc, told Reuters.

He said over stock was most acute for top line BMW and Mercedes-Benz models in Texas and Oklahoma.

In a nod towards the downturn, Ouisie’s Table, a River Oaks institution, presenting its “Oil Barrel Bargain,” a three course dinner for the price of a barrel of oil, now around US$30.

To be sure, oil executives are not alone in feeling the pain. Many blue collar jobs in oilfield equipment production have disappeared. So have thousands of middle management jobs in oil exploration and production. A regular Uber customer is likely sooner or later to ride with a former energy industry professional.

“Its smart for that mortgage,” said Matthew Clemonds, who once did mapping for pipeline companies and today works for the ride-sharing company.

Job growth has slowed to some crawl from the breakneck pace of 100,000 a year during the oil boom; housing starts are down and subleasing of recent work place is booming, according to government data and NAI Partners, a genuine estate consultancy.

But to date, because of its diversity, the metropolitan economy has shown remarkable resilience, adding 20,000 jobs to just over 3 million last year.

For example, Houston hosts the Texas Clinic, the world’s largest cluster of hospitals, research facilities and affiliated universities, which says it employs 106,000.

In the energy sector, about US$50 billion being invested in new petrochemical plants to take benefit of cheap supplies is helping offset upstream job losses.

“This is actually the best oil price downturn we have ever had,” said Ted Jones, chief economist at Stewart Title Guaranty Company. “We still have more jobs than we’ve had in history.”

Bill Gilmer, a school of Houston economist, says so far it has paid off to tough it out through oil’s booms and busts and notes that ever since 1969 Houston has consistently ranked one of the fastest growing U.S. cities.

“The only issue is it could be a rollercoaster.”

? Thomson Reuters 2016

The Liberal government’s case for additional spending may get a lift if fourth quarter GDP comes in worse than expected on Tuesday.

Canada still lagging behind U.S. growth, and also at this time, we’re nowhere near to catching up

Divergence in United states economies shows little manifestation of narrowing. While the U.S. economy performed better than expected within the final quarter of 2015, Canada’s output likely slowed because of the ongoing drag from low oil prices and weak business investment.

Continue reading.

It appears that GDP rose by a paltry 0.3 per cent for 2015 as a whole, which would mark the weakest 12-month gain since the final quarter of 2009.

“The problem is if the economy slightly expanded or contracted within the final quarter of this past year,” said Derek Holt, an economist at Scotiabank, in a note. “Q4 GDP could increase pressure on Ottawa to add stimulus on March 22nd once the Federal budget lands.”

Despite the slowdown, Pm Justin Trudeau’s campaign promise to inject the Canadian economy with fiscal stimulus has received lots of criticism, in large part since the projected budget deficit has ballooned to $18.4 billion for next fiscal year (starting April 1).

The higher deficits outlined in Finance Minister Bill Morneau’s recent fiscal update don’t include many of the Liberal’s election promises, such as infrastructure spending, so the final projection is likely to come nearer to the $25 billion to $30 billion range.

Holt noted that much of the economy’s deterioration occurred at the end of the 3rd quarter, in September, so it entered Q4 at a weak starting point.

“That was the only real monthly contraction out of the past 6 months, however it automatically put the Canadian economy behind the eight ball into Q4,” he noted.

That’s why a lot of the focus is going to be on how Q4 ended, and December GDP figures (also out Tuesday) will give you some answers.

The finance department is more conservative than the others, projecting nominal GDP growth of only 0.4 per cent in 2016, when compared with an average of 2.4 per cent among private forecasters.

RBC comes in near the low end, estimating average annual growth in nominal GDP of just one per cent for 2015 and 2016. That would be the weakest two-year performance outside of the 2008 financial crisis.

The bank also noted the actual stimulus from new programs may only be roughly 0.5 per cent of GDP.

If Q4 growth measures zero as anticipated, that will mean the Canadian economy didn’t grow in three of the past four quarters.

While many don’t like the idea of massive deficits, the ones that support the Liberal plan include David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates.

“I would recommend reviving economic growth with fiscal policy at a time once the energy sector is detonating and there is heightened uncertainty,” he wrote in a note. “Perhaps understand that the problems (oops, I meant challenges) that Canada confronts will find little when it comes to remedy from monetary policy – the country hardly suffers from high interest rates or perhaps an uncompetitive exchange rate.”

National Bank Financial recommended the Liberal government fully implement its election spending platform, while also creating a $20 billion special trust to invest in targeted projects that will make the greatest chance of growth.

With Canada’s current debt-to-GDP ratio of 31 per cent, National Bank Financial’s chief economist and strategist, Stfane Marion, believes ?the federal government has wide latitude to make use of these fiscal tools – “a more potent policy instrument in the present circumstances – to aid growth and ease the reorientation from the Canadian economy toward non-resource sectors.”

On budget day, Canadians will become familiar with the extent that the us government shares this view.

Financial Post

jratner@nationalpost.com

Nearly 4 years after the auditor general found serious too little the way the federal government supports the aerospace sector, important questions remain unanswered as Ottawa weighs Bombardier’s request another US$1 billion in support.

Bombardier's biggest CSeries customer, Republic Airways, files for bankruptcy protection

Republic Airways asserted it’s filed for Chapter 11 bankruptcy protection, citing a nationwide pilot shortage which has weighed on revenue

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Bombardier has asked the us government to match the investment it has already caused by Quebec, arguing it requires the aid to enhance customer confidence and support the beleaguered CSeries jet program until it starts to generate positive cash flow in 2020.

The Liberals say they’re still evaluating the request, and keep that Bombardier will have to make a “strong business case” before it receives any assistance.

This is a refreshing stance, even though the government will undoubtedly support Bombardier in the end, said Peter Hadekel, author of Silent Partners: Taxpayers and the Bankrolling of Bombardier, an in-depth look at decades of government largesse.

“We haven’t heard that sort of language all that much previously,” said Hadekel, a columnist for that Montreal Gazette. “The business case has never really mattered much.”

This can be seen within the shortcomings discovered by Auditor General Michael Ferguson in his fall 2012 report. Based on Ferguson, the government didn’t adequately track the performance of their aerospace funding programs, including one dedicated specifically to supporting the CSeries. Even though several improvements have been made since 2012, the federal government still has not evaluated the potency of vast amounts of dollars in aerospace aid.

The Canadian aerospace industry continues to be receiving government assistance in a single form or any other since at least 1959, once the Cold War-era Defence Industry Productivity Program (DIPP) was created to encourage defence-related industries that may compete internationally.

DIPP was cancelled in 1995, even though it arguably succeeded in supporting Canada’s defence and aerospace companies, it had been failing when it found repayment.

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From 1985 onwards, DIPP beneficiaries received $2 billion in government funding, 55 per cent which was repayable. Of that, only $607 million or 30 percent of the total had been returned by mid-2012.

DIPP was replaced by Technology Partnerships Canada (TPC), which ran from 1996 to 2006. From the $3.1 billion disbursed under TPC, $767 million or 25 % have been repaid by mid-2012.

Although ten years has transpired since TPC was cancelled, the federal government still has not completed your final assessment of the program. As a result, its successor, the Strategic Defence and Aerospace Initiative (SADI), is passing up on information that could make it more effective, the auditor general said.

“We found that a final evaluation of TPC’s program effectiveness – including of the program’s longer-term technological, economic and societal outcomes – is not done,” despite the fact that Industry Canada said it would compete the evaluation by 2011, the report says.

“This means (Industry Canada) is not yet capable of integrate lessons learned from a final evaluation of TPC to potentially improve performance measurement for SADI.”

Industry Canada – renamed Innovation, Science and Economic Development Canada through the Liberals – is “progressing on and will be finalizing a lessons-learned report,” department spokeswoman St

The two Canadian investment banks that acted as financial advisers in Corus’ $2.65-billion purchase of Shaw Media have taken opposite approaches to how their research desks have covered the proposed transaction, that has been opposed by a minumum of one Corus minority investor.

Catalyst’s opposition to Corus-Shaw Media deal questioned by investors, analysts

The motives fuelling a minority shareholder’s make an effort to thwart Corus’s $2.65 billion purchase of Shaw Media were called into question Friday, as Catalyst Capital Group Inc. aired its concerns concerning the proposed sale on a business call with investors and analysts.

Continue reading.

Equity analysts at RBC Dominion Securities Inc., which acted for Corus Entertainment Inc., published research notes on Feb. 12 that offered a favourable opinion of the offer and analyzed the outlook for Corus and Shaw Media’s parent company, Shaw Communications Inc. In contrast, analysts at TD Securities Inc., which was hired by Shaw, happen to be prohibited from releasing any comments about the companies for an unspecified time period.

Both banks stand to generate millions in fees if the deal close.

The related-party transaction requires more than half of Corus’ minority investors to vote in favour of it either before or at a special meeting, which is held on March 9. It means shareholders can nonetheless be persuaded by research reports from brokerages and shareholder advisory research companies. 

Private equity firm Catalyst Capital Group Inc., which specializes in distressed debt situations, has raised questions about Corus’ lack of disclosure within the management information circular, that was published on Feb. 9, and the $2.65-billion price tag – a figure it contends is as much as $858 million too high. 

For the global research industry, which has been plagued by concerns over potential or perceived conflicts associated with investment banking clients, preserving autonomy is crucial.

To assist in managing actual or perceived conflicts of interest, RBC and TD say they follow strict internal policies that protect the independence of their research divisions. Certainly one of the tools that’s employed is a virtual and physical barrier that restricts and monitors the flow of knowledge between the research and investment banking sections. 

Both RBC and TD maintain internal policies that forbid their research analysts from talking with reporters. Official spokespeople offered limited explanations via email.

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“At the time of publication, neither Corus nor Shaw were restricted,” said Gillian McArdle, a spokeswoman at RBC. “Restricted” means that analysts are banned from publishing research. “We have comprehensive policies and procedures in place which govern the publication and distribution in our research.” She didn’t say why the businesses weren’t on the restricted list, or if so when the happy couple could be put back on this type of list.

In their notes, RBC’s analysts updated their estimates for companies and decreased their price target for Corus’ class B shares to $12 from $13 “following a period of research restriction.” They commented around the merits and pitfalls from the deal, calling it “an interim solution” in today’s slumping media environment.

“Our view of the Corus-Shaw Media transaction is relatively balanced,” one research note reads. They write that the combination “creates a stronger company with meaningful scale and a ‘right to win’ in a maturing broadcasting industry.” But they also explain some risks, too, including the lingering uncertainty around channel unbundling, a softer ad market and the “relatively high leverage” that Corus will need to pay for it.

But some are questioning RBC’s decision to publish their reports before the March 9 shareholder vote. Despite the fact that its research and investment banking arms are distinct, positive analysis could be seen as conflicted.

“It might happen to be prudent for RBC to haven’t issued any investment reports to prevent any appearance of a conflict of interest,” Laurence Booth, a company finance professor in the University of Toronto’s Rotman School of Management, said.

“When you start referring to compliance, the question isn’t whether it this is legal or illegal activity, but a question of whether a bank really wants to get involved with some kind of questionable activity that may play out poorly in the court of public opinion. That’s the job from the bank.”

In contrast, TD says it hasn’t published about the deal because it’s material to an investment banking client.

“TD Securities has a policy to limit analyst research on clients involved with a transaction deemed material to the clients,” said spokeswoman Alison Ford. When asked what is the foundation for this policy, she pointed to an Ontario Securities Commission policy that “provides general guidelines that registrants may wish to consider” for crafting policies and operations for safeguarding inside information about an issuer.

The OSC suggests that a registrant “should normally” move an issuer’s name to some restricted list when their relationship continues to be disclosed to the market, but the bank might be in possession of or could gain access to material knowledge over the course of a transaction.

The guidelines say that in this case, the dissemination of research materials concerning the issuer’s securities “ought to be restricted or stopped.” It says that a company “should normally” be moved from a restricted research list after any inside details are disclosed towards the market “following completing a distribution or perhaps a merger or acquisition.”

Ford declined to elaborate on why a study restriction have been initiated or when its institutional clients can get it to be lifted. “I can’t confirm the details,” she explained. “It might be inappropriate to publicly discuss our internal policy. Our internal policy is within place using the best interest of our clients in mind.”

Financial Post
cpellegrini@nationalpost.com