Brewer quits as Air Canada CEO March 31, 2009
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Montie Brewer has resigned as president and chief executive of Air Canada, the company said in a surprise announcement Monday night.
Calin Rovinescu, a former Air Canada executive who played a key role in the airline’s 2003-04 court-supervised restructuring, has been named as his replacement.
“On behalf of the board, I would like to express our sincere thanks to Montie for his contribution to Air Canada since joining the company in 2002,” Air Canada chairman David Richardson said in announcing the changes.
Rovinescu, who takes over Wednesday, will also assume Brewer’s seat on the airline’s board of directors.
“Calin’s reputation as a proven leader and his wealth of experience in corporate strategy will serve Air Canada well during this particularly challenging period for the world’s airline industry,” Richardson said in a statement.
A lawyer by training, Rovinescu was managing partner of the Montreal law firm Stikeman Elliott before joining the airline in April 2000 as executive vice-president of corporate development and strategy.
He later became chief restructuring officer before resigning in April 2004 in the middle of the airline’s revamping.
Rovinescu is rejoining Air Canada from Genuity Capital Markets, an independent investment banking firm he helped found.
Air Canada shares on the TSX closed down three cents at $1.15 on Monday afternoon, before the announcement. The stock is drastically down from its 52-week high of $9.84, which it hit last April.
With files from the Canadian Press (more…)
N.W.T. diamond mine scales back operations March 31, 2009
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The Diavik diamond mine in the N.W.T. will stop production for two six-week periods, defer the start of underground mine production and speed job cuts to cope with the challenging global market, its owners said Monday.
The summer shutdown is scheduled for July 14 to Aug. 24, while the winter shutdown is scheduled for Dec. 1 to Jan. 11, 2010, Diavik Diamond Mines said in a news release.
In addition, the underground mine will be placed on care and maintenance by the third quarter, once the majority of its construction is complete, said the company, a joint venture between a wholly-owned subsidiary of London-based Rio Tinto and Harry Winston Diamonds.
Earlier this month, Kinross, one of Canada’s largest gold producers, said it would invest $150 million US in Harry Winston in exchange for an indirect piece of the Diavik diamond mine and a 20 per cent stake in Harry Winston.
Harry Winston, the former Aber Diamond Corp., said the cash infusion will help it pay down debt.
“Our announcements today will preserve the quality of our assets, and position us for the future,” said Diavik president and chief operating officer Kim Truter in the release.
“Throughout these changes Diavik will continue its commitment to the North and to the health and safety of our workers and the protection of the environment.”
The company is optimistic the economy will pick up, it said, adding its future is in the new underground operation.
The Diavik mine went into production in 2003. It is one of three diamond mines in the N.W.T. and employs about 750 people.
With files from the Canadian Press (more…)
G20 countries need to expand ‘perimeter’ of banking rules: Carney March 31, 2009
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Bank of Canada Governor Mark Carney lectures at the University of Alberta School of Business in Edmonton on Monday. (Jimmy Jeong/Canadian Press)
The world’s major industrialized countries must expand what they regulate in the financial sector and how they regulate it to avoid another credit collapse, Canada’s chief banker said Monday.
Bank of Canada governor Mark Carney told a University of Alberta audience that G20 countries should set rules for anything in the credit markets that “can pose a systemic risk to financial stability.”
“This will include pools of capital of material size, leverage and maturity mismatches,” he said.
In recent months, central bankers have tried different financial manoeuvres ? everything from cutting interest rates to buying distressed debt ? in a bid to loosen up atrophied credit markets and stop the global economic slide.
The common consensus is that these measures, even if they prove effective, are remarkably slow in working their way through various economies.
Carney said Canada has proven to be one of the better countries at keeping their financial institutions ? and by implication the Canadian economy ? out of the asset-backed commercial paper muck.
“Our system is better … [but] many of the current constraints in our system reflect the impact on Canada of failures in the international financial system and of international institutions,” he said.
The G20 leaders, who are set to meet in London this month, will be faced with a world in which many countries are interlinked financially, allowing banks and other institutions to avoid those jurisdictions that impose more difficult rules, experts said.
As well, “shadow banks,” companies that lend money in ways similar to traditional financial institutions, came to the forefront in recent years, Carney said. That resulted in buckets of lending going into riskier areas, such as zero per cent mortgage lending in the United States.
More regulation of more financial institutions would help, Carney said.
Canada 10th in world in harnessing technology: report March 30, 2009
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Canada is once again one of the Top 10 countries in the world at harnessing information and communications technology, according to a survey published Thursday.
Canada climbed from 13th to 10th in 2008-09 in the World Economic Forum’s annual report on “networked readiness index,” returning to the Top 10 after a two-year absence.
Denmark once again topped the annual index, which measures a range of factors that affect a country’s ability to harness information technology, including the political and business environment, how many people are using technology and how “ready” individuals and organizations are to adopt new technologies.
The index is based on surveys of executives and raw numbers of measures such as internet users and time required to start a business.
Following Denmark in the Top 10 were Sweden, the United States, Singapore, Switzerland, Finland, Iceland, Norway, the Netherlands and Canada.
The World Economic Forum, a Geneva-based non-profit foundation, has been conducting these surveys since 2002-03. Canada ranked in the Top 10 in each of the first four years of the survey before dropping from sixth to 11th in 2006-07 and falling again to 13th the following year.
Low ‘readiness’
After last year’s survey, the forum said Canada’s relative poor showing was a result of a low score in “readiness,” particularly in how much priority government in Canada gave to information and communication technologies and how ready it was to embrace new technologies.
In the latest ranking, Canada’s government readiness climbed from 25th to 20th and its overall readiness climbed from 20th to 14th, allowing Canada to leapfrog over South Korea, Hong Kong and the United Kingdom in the overall rankings.
Canada has the top ranking in the world in the number of procedures required to start a business (one) and the number of households with personal computers (94.58 per 100 households, taken from 2006 data). But Canada was ranked outside the top 50 in categories such as mobile phone subscribers and the survey respondents’ assessment of the extent and effect of taxation.
The report covered 134 countries, with Chad, East Timor, Zimbabwe, Burundi and Bangladesh at the bottom.
The WEF report differs in its findings from a report earlier this year by the UN’s International Telecommunication Union.
That report ranked Canada 19th out of 154 nations according to how advanced its use of information and communications technology are, and was based solely on hard numbers, such as the amount of bandwidth available per internet user, the proportion of households with computers and internet access, and the literacy and education levels of a country’s population.
With files from the Associated Press (more…)
Budget raises tax for 1 in 5 new Ontario homes March 30, 2009
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About one in five new homes built in Ontario will see a six per cent price increase next year because of the provincial government’s plan to merge the provincial sales tax and GST, says Mike Collins-Williams, policy director for the Ontario Home Builders’ Association.
The province and federal government have agreed to harmonize the provincial sales tax and GST into a single 13 per cent sales tax by July 1, 2010, the province confirmed in Thursday’s budget. The merged tax will replace the existing retail sales tax.
That would have the effect of boosting the tax on new homes (resales are excluded) by six per cent, the budget said.
For homes priced under $400,000, the province is proposing a rebate to offset the tax increase. For homes priced between $400,000 and $500,000, there will be a partial rebate. The details have not been released yet.
The government said the rebate would be worth about $1.1 billion a year to buyers of new homes.
Ontario new home sales 2008
Price Per cent of sales
Under $400,000 54.7
$400,000 to $500,000 22.6
Over $500,000 22.7
OHBA, citing federal statistics
Based on federal statistics for 2008, Collins-Williams said 22.7 per cent of new homes in Ontario sold for over $500,000, approximately the same number cost between $400,000 and $500,000, and slightly more than half were under $400,000.
But with the wide variations in home prices across the province, the effect will vary by community. In general, more homes in Ottawa and Toronto, where prices are higher, will be caught by the combined tax.
It is almost certain that more home sales will trigger the higher combined tax as time passes, because prices have gone up over the long term, the association said.
“Inflation and rising home prices will erode affordability over time as fewer and fewer new homes qualify for a rebate, making new homes priced over $500,000 among the most heavily taxed products,” association president Frank Giannone said in a news release.
Collins-Williams pointed to the example of the federal goods and services tax, introduced in 1991. When it began, houses priced under $350,000 were exempt, and those under $450,000 got a partial break. The federal government said those figures would be indexed, but “that hasn’t happened.”
Many more home sales attract GST today because prices have risen.
He said builders looking at a house with a planned sale price of $410,000 might cut its size or reduce the amenities to duck the tax. Likewise, consumers may adjust their behavior.
“You might be budgeting $399,0000 and no more.”
Harper credits regulations for preventing bank bailouts March 30, 2009
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Canada has achieved a balance in the regulation of its banks that will serve the country well once the global economy begins to recover, Prime Minister Stephen Harper said in an interview Sunday with a U.S. television network.
On Fox News Sunday, host Chris Wallace pointed out that Canada’s relatively tough banking regulations mean no Canadian banks have needed a bailout, but he asked Harper if he was worried that regulation saps the innovation and risk-taking that goes on in a freer market.
Harper said it’s fine to say that countries should have less regulation in principle and less intervention in the marketplace, but that approach can mean more intervention.
“It’s led us to a situation where the government is, in fact, intervening massively as a consequence of under-regulation and where we now have, effectively in many countries, nationalization of the financial system,” the prime minister said.
“I know in Canada there have been some criticisms in the past that we were perhaps too [much of an] activist, intervening too much, but we’re emerging from this probably with the only truly free market financial system in the world,” he said.
Harper said Canada has a “pretty decent balance” where the government doesn’t try to micro-manage financial systems.
The interviewer also asked whether Canada, as the only western nation that has had no bank bailouts during the economic crisis, believes U.S. President Barack Obama should be doing more to police financial institutions.
Harper responded by saying he believes the Obama administration does want reforms in the financial sector, something Canada will be recommending at this week’s G20 meeting in London.
The prime minister made the comments while in Washington, where he was giving media interviews ahead of the summit.
Canada and India are co-chairing the G20’s working group on the reform of financial regulations.
Harper wants member countries to commit to a broad series of reforms to increase transparency in the financial sector.
652,000 Americans applied for their first jobless benefit last week March 30, 2009
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The number of Americans filing their first jobless benefit claim rose slightly last week while the number of people continuing to claim benefits set a record for the ninth straight week, according to the U.S. Labour Department.
It said first-time claims for unemployment insurance rose to a seasonally adjusted 652,000 from the previous week’s revised figure of 644,000, slightly higher than analysts expected.
A year ago, the number was 367,000.
The number of continuing claims has increased by more than 100,000 four times in the past five weeks, an indication that workers are remaining on the rolls for longer as they struggle to land a new job after being laid off.
As a proportion of the work force, the number of people receiving benefits is at its highest level since May 1983, when the economy was recovering from a steep recession.
Separately, the Commerce Department reported that the gross domestic product, the broadest measure of the nation’s economy, fell at an annual rate of 6.3 percent in last year’s fourth quarter, slightly worse than the previous estimate of 6.2 percent.
The recession drove the U.S. unemployment rate to 8.1 per cent last month, the highest in more than 25 years. Some economists expect the rate could reach 10 per cent by early next year.
The jobs report was more or less what investors had expected and the New York markets opened up this morning, with the Dow Jones trading up 80 points to around 7800 in late morning trading.
Magellan might call it quits despite Q4 profit March 30, 2009
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Magellan Aerospace Corp. might not be able to stay in business because of the tough global credit market, despite turning a fourth-quarter profit, the Canadian aerospace company said Friday.
Toronto-based Magellan, which makes airplane parts, said the firm needs to renew a credit facility and an outstanding loan itself worth $50 million. If not, the company said it might not be able to avoid some sort of company insolvency.
“If the corporation is unable to renew or refinance its operating credit facility…and extend its original loan, its ability to continue as a going concern is uncertain,” Magellan said in releasing its fourth-quarter earnings.
Magellan said it is looking at the issuance of new securities or debt instruments and the possible sale of firm assets as a way of raising cash.
Decision time
Magellan has given itself a deadline of April 30 to renegotiate its outstanding credit facility ? $95 million in Canadian funds and another $90 million in U.S. dollars ? or a side deal by which Magellan’s chairman Murray Edwards has agreed to buy $25 million, or 50 per cent, of a new issue of convertible debentures falls by the wayside.
In addition, Edco Capital Corp., Edwards’s own company which lent Magellan another $50 million, has agreed to extend the repayment period by one year. In return, Edward’s capital arm will receive a one-time payment worth one per cent of the outstanding value of the loan and an extra two percentage points added to the loan’s interest rate.
Making money
All of Magellan’s corporation manoeuvring comes in the wake of decent fourth-quarter results for the company.
Magellan, which also owns Winnipeg’s Bristol Aerospace Ltd., popped out earnings of $7.4 million, or 39 cents a share, for the three months ended Dec. 31, 2008. That was a marked improvement compared with a loss of $4.95 million, or 29 cents, for the same period one year earlier.
For the year. Magellan made $12.9 million, or 62 cents a share, versus a loss of $11.3 million, or 71 cents, for the previous fiscal year.
Revenue for the fourth quarter was also higher, up almost 16 per cent to $180.1 million.
Black MBA mentors give Toronto teens keys to the boardroom March 30, 2009
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The Toronto chapter of the National Black MBA Association is giving two dozen black high school students a glimpse into the heart of the city’s financial district on Saturday, as part of a pilot mentoring program.
Twenty-three students from Sir Sanford Fleming Academy in the city’s Lawrence Heights neighbourhood will spend the day with association members in the boardroom of the TD Canada Trust Tower, where they will discuss financial management, team-building and careers.
Efe Enoyoze, a Grade 11 student, said he jumped at the chance to meet black professionals who have succeeded in the corporate world.
Lawrence Heights is one of the city’s 13 so-called “priority” neighbourhoods because of violence and poverty.
Enoyoze said he often witnesses the negative stories about his community and knows the significance of being able to sit in an executive boardroom and learn from people who look like him.
“Successful and black ? usually that’s not what’s associated with each other these days,” he said. “So I thought, ‘Yeah, it’s going to be good for me to witness this.’”
Robert Johnson, an association member, told CBC News he wants the program to give the students a message of possibility , as well as create a pool of young black talent.
“We can find those marginal students that we can move into the A and B category to get them into university and get them into the pipeline,” he said.
Grade 11 student Breea Carvery said she is ready to work to toward a permanent role in the boardroom one day ? as an executive.
“I just want to go farther than other people because I know I can go far if I see black people making [it] that far,” she said.
Proposed Maine, N.B. energy corridor jolts talk of new jobs March 28, 2009
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Business leaders and politicians in the Maritimes and northeast United States say a proposed northeast energy corridor could spur on billions of dollars in investment.
‘The northeast energy corridor would be the backbone for a new commerce corridor of economic development and trade.’? John Baldacci, Maine governor
New Brunswick Premier Shawn Graham and Maine Gov. John Baldacci announced the first steps of an energy corridor that could send renewable electricity and natural gas from Atlantic Canada into the energy starved New England states.
Saint John-based Irving Oil Ltd. said Wednesday it is undertaking a technical and commercial study on the first phase of the international power corridor that will include the possible construction of a 500- to 600-megawatt natural gas-fired co-generation power plant, a 1,200- to 1,500-megawatt transmission line and the addition of an unspecified amount of wind power.
The transmission capabilities would also help deliver electricity from the proposed second nuclear reactor at Point Lepreau, N.B., and the Lower Churchill hydro projects in Newfoundland and Labrador.
Chris Huskilson, the president and chief executive officer of Emera Inc, which owns Bangor Hydro, said the proposal linking Saint John with customers in Boston could have an upside for future energy projects across the Atlantic region.
If the northeast corridor proceeds, the utility has a preliminary agreement to build a $2-billion underground transmission line between Bangor, Maine, and Boston.
“We are working together right now to identify whether or not the interstate highway system can be used as a part of that next corridor ? that is what Bangor Hydro is doing with the state,” he said on Wednesday.
“There are opportunities for producers in the entire region. The better connections we can make between our region and the rest of New England then the more opportunities that open up for everyone.”
Corridor could spur on additional energy projects
The capacity of the new transmission line would be four to five times larger than the existing interconnections between the Maritimes and Maine.
The New Brunswick government has spent the last several years pitching the Saint John-area as a regional energy hub because of its growing list of energy projects that are already located in the area or are proposed for the coming years.
Bob Manning, the chairman of Enterprise Saint John, said the energy corridor project would be a critical step as the city positions itself as a major energy player in the region.
“This isn’t just one company anymore [talking about energy projects in the region],” Manning said.
“We are talking multiple companies looking at the opportunities here. Companies like Irving Oil, companies like Repsol, companies like Emera and others are all coming together and they are dialoguing on how we can make most effective and efficient use of assets and continue to build assets in this region and get product to market.”
Across the U.S. border, the Maine governor is pinning a lot of his state’s hopes on his new Canadian connections.
Baldacci said the proposed corridor would create new business ties between his state and the neighbouring provinces.
“The northeast energy corridor would be the backbone for a new commerce corridor of economic development and trade,” he said.
“The corridor would help to attract significant direct investment to the region for job generation and business growth. The first phase of this project would attract about $2 billion in investment and create thousands of jobs in Maine and New Brunswick.”
