M&A activity up 12%: report November 30, 2009
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Canadian merger and acquisition activity edged higher in the third quarter, reflecting continued improvement in financing conditions and company valuations.
A report by Crosbie & Company says 221 transactions were announced in the July to September period, up 12 per cent from the second quarter.
In the same period, the value of Canadian M&A transactions increased by $30.2 billion, up 27 per cent from the prior quarter.
Crosbie says strategic buyers, private equity buyers and financiers have all stepped up activity over the past two quarters.
The oil and gas industry saw the most transactions, followed by the industrial products sector.
However, M&A activity remains well below pre-recession levels.
The Canadian Press, 2009
Canwest revenues, profit slump November 30, 2009
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Canwest Global Communications Corp., which is in the midst of a major restructuring, said Friday it lost $111 million in the three months ended in August.
Falling advertising sales pulled revenue down by 13 per cent to $624 million .
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Canwest Global Communications Corp. lost $111 million in the three months ended in August.(John Woods/Canadian Press)
Winnipeg-based Canwest, which owns the Global television network and the National Post newspaper among other media assets, has several of its subsidiaries under court protection from creditors.
The fourth-quarter loss was an improvement over the same period a year ago, when it lost $1.02 billion.
On an operational basis ? before subtracting special charges ? Canwest posted a profit of $25 million in the fourth quarter, off from $60 million a year earlier.
For its entire fiscal 2009, Canwest posted operating earnings of $310 million, down from $551 million one year earlier.
An operating profit essentially means the company makes money from running its usual businesses and is a different measure of financial performance than net profit or loss number.
Ads shrivel
Canwest, like many media organizations, suffered a drop-off in such sales during the recession of late 2008 and early 2009.
In the fourth quarter, the Winnipeg-headquartered company, which received bankruptcy court protection for its broadcast TV holdings in October, saw overall revenue slump to $624.4 million, down from $720.6 million in the last quarter of 2008.
In addition, the company said fourth-quarter revenue fell by seven per cent in its conventional television business and by 20 per cent on the publishing side of the company, which includes a stable of newspapers not included in Canwest’s filing for protection from creditors.
Nevertheless, company executives maintained that Canwest’s various media arms outperformed many of their competitors.
“While the abrupt and unprecedented decline in advertising revenue had a significant impact on Canwest, most business units continued to perform better than the industry average, with online and specialty television reporting growth even in the face of the recession,” said president and chief executive officer Leonard Asper.
Cost-cutting helped Canwest’s financial performance somewhat as the company slashed 1,372 jobs during the year.
As a result, Canwest cut its overall costs by 13 per cent.
Tories set to introduce HST bill November 30, 2009
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The federal Conservatives are set to introduce legislation next week that would allow provinces to harmonize the provincial sales tax and federal GST on products and services.
While the legislation will not be put to a confidence vote, it would put the Liberals in the position of either supporting a measure unpopular with consumers or opposing the wishes of the B.C. and Ontario Liberal governments. Both have moved ahead with plans to merge the taxes.
“This is not a complicated decision,” according to draft talking points prepared for Finance Minister Jim Flaherty, obtained by The Canadian Press. “Either Parliament supports the right of the provinces to choose a harmonized value-added tax or it does not.”
“This legislation will have the support of the Official Opposition or it will not. If it does, we expect the bill to win approval before the Christmas recess,” the notes say.
The NDP opposes the Harmonized Sales Tax (HST). But on Friday, the Bloc Québécois told reporters it would support the proposed bill.
Liberal Leader Michael Ignatieff has said that if the Liberals formed a government, they would not cancel HST agreements signed with the provinces. But it was unclear whether they would support this proposed federal bill.
The Liberal governments of Ontario and B.C. have moved ahead with plans to merge the taxes.
The HST would raise the price on some consumer goods that had previously been exempt from sales tax. The National Citizens Coalition estimates the HST will cost the average taxpayer an additional $800 to $1,000 annually.
But the Canadian Federation of Independent Business says harmonization will save business $100 million a year in reduced red tape.
Upon introducing legislation to harmonize Ontario’s eight per cent sales tax with the five per cent GST, Premier Dalton McGuinty pointed to a study the government commissioned that shows moving to a single sales tax would help create almost 600,000 jobs over 10 years.
Jay Hill, the Tory House leader in the Commons, and Flaherty met with Liberal House leader Ralph Goodale on the matter on Thursday, in an attempt to find a compromise.
Goodale’s office would not say where the Liberals stand.
“We want to see the bill before we do anything,” a spokesman said.
With files from The Canadian Press (more…)
‘Nortel bill’ would protect workers, pensioners November 30, 2009
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Technology giant Nortel has been selling off its units since falling under bankruptcy protection in January. (Rebecca Zandbergen/CBC)
A private member’s bill proposed by a New Democrat MP could help protect employees and pensioners in the wake of a corporate collapse.
Wayne Marston, a Hamilton-area MP, tabled the so-called Nortel bill in early November to change the federal Bankruptcy and Insolvency Act so that former workers and pensioners would become preferred creditors in situations of corporate bankruptcy.
Currently, former workers ? like those who were with Nortel Networks Corp., which filed for bankruptcy in January ? are considered unsecured creditors and are at the back of the line to receive payouts from bankruptcy proceedings.
Laid-off and retired Nortel employees are having to fight the company in court for their severance packages, pensions and disability payments, and a recent court ruling suggests there is no guarantee they will be paid. On Thursday, the Ontario Court of Appeal ruled that Nortel did not violate the law when it refused to pay 45 former workers any severance or retirement payments.
While opposition bills are rarely passed into law, Marston said his proposed legislation has been well-received by both government and opposition members. However, he stressed that Parliament needs to work quickly to get the amendments in place in time to help former Nortel employees.
More exec raises approved
The recent news of executive bonuses at Nortel has highlighted the push for legislative change to help former workers get severance and pensions in cases of corporate collapse. On Thursday, CBC News reported that management at Nortel Networks, already under fire for handing out executive bonuses, approved a plan this fall to give another round of raises to its top managers.
According to an internal corporate document obtained by CBC News, 72 Nortel executives will receive a total of $7.5 million US in salary increases, investments or bonuses on top of their current salaries in 2009.
The biggest earner under the new compensation plan is former treasurer John Doolittle, who took over as head of the company’s corporate group in August. Doolittle’s total compensation has been bumped to $1.68 million this year, an increase of $1.12 million over 2008, when he earned $390,000 US in salary and an estimated $170,000 US in investment and bonus money.
Marston said he’s disgusted by the news of the bonuses.
“This particular group of people and the gentleman who heads up [Nortel] makes half-a-million a year, now getting $1.7 million in bonuses ? How does he sleep at night?”
Chris Buchanan, a former Nortel manager who was laid off a year ago with no severance, said the bonuses may not be illegal, but they’re unethical.
“I’m puzzled, is the polite way of putting it. I don’t think there’s any working employee at Nortel who really understands what the logic is at the exec level. I think there’s a lot of suspicion that the execs, their primary goal is to maximize the incentives they got.”
Canadian retailers try their own Black Friday November 30, 2009
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Shoppers wait for doors to open at Nebraska Furniture Mart on Black Friday in Kansas City.(Associated Press)
Some Canadian retail chains are planning big price cuts this weekend in an effort to keep customers from crossing the U.S. border to take advantage of Black Friday bargains.
Wal-Mart’s Canadian subsidiary has announced it will drop prices on some items. Sears Canada and Future Shop are also planning big weekend sales to hold on to shoppers.
“Everyone likes a good deal and we recognize that,” Elliott Chun, Future Shop’s communication manager, said in an interview with CBC News.
The electronics retail chain is cutting prices over the weekend on everything from video games to washers and dryers, although Chun said he did wonder if people would go all the way to the U.S. to buy such large items.
“The customer has to ask themselves ? there’s the cost of the gas, then the time and effort to cross the border. And then there’s a chance you won’t get your hands on the product you want,” said Chun.
“We’re just doing our best to give Canadians an opportunity to stay here and shop, and hopefully shop at Future Shop.”
Border business
Windsor retailers don’t dread Black Friday, as much as one would think, given the city’s proximity to Detroit across the river.
“Traditionally Black Friday is an American holiday, but we do get the spinoffs,” said Blair Gagné, manager of the Windsor Crossing outlet mall. “The people who wake up at 5:30 in the morning and go shopping in the states. They come back over here because they’re still in the mood to shop.”
“We find that mall tenants have provided more discounts here than they have in the past, and it’s really benefited us. Our traffic has been up, our sales have been up, and people are looking for that bargain,” said Gagné.
Some Canadian shoppers were content to leave the hassle of cross-border lineups to others.
“I was not very interested to go over, being that what I need to get is here. Again, I’m a Canadian. If I do something here, that will make me happy, using my money here. I’m living here,” said Windsor resident Shah Alam.
However, CBC’s Dennis Porter said plenty of Canadians were prepared to make the trip and boost the U.S. economy in the process.
“It’s close enough that a lot of Canadians can actually go over to Detroit, take advantage of some of the great deals overnight and be back in Windsor in time to go to work this morning,” said Porter.
“A lot of the products are about 50 per cent less in Detroit [on Black Friday] than they are in Windsor, even in the same store,” said Porter. “So, for instance, at Wal-Mart, in the U.S., they have a laptop for $200 US. In Canada, at Wal-Mart, that same laptop about $370.”
On Friday, retailers across the U.S. opened as early as midnight for the busiest shopping day in the U.S.
Black Friday, the first Friday after the American Thanksgiving, marks the beginning of the Christmas shopping season and is considered the day when store ledgers are pushed into “the black,” or profitability.
Sales during Black Friday and the weekend following can account for as much as 40 per cent of annual sales and profits for many stores.
Shopping mobs
U.S. retailers now mark the day by offering low prices on a range of products, and mobs of shoppers who want to take advantage of the bargains line up hours before stores open. Some people even camp out overnight.
Last year, a Wal-Mart employee was trampled to death as shoppers stampeded into a store at Valley Stream, N.Y.
This year was tamer, with few injuries reported across the U.S.
At the Toys “R” Us store in Manhattan’s Times Square, people lined up 200 deep in anticipation of the midnight opening ? five hours earlier than a year ago. Some were tourists who got in line right after watching the Macy’s Thanksgiving Day Parade; others were New Yorkers wanting to get a good deal on game systems or get their hands on this year’s toy craze, Zhu Zhu Pets robotic hamsters.
In suburban Cincinnati, shoppers began streaming into a Wal-Mart Supercenter around midnight to pick up tickets that can be traded directly at the register for certain big items like sale-priced televisions and computers. The tickets, which usually have an expiry time, are used by some stores as a way of limiting the chaos inside the store and streamlining the purchase of some popular items.
By 4 a.m. shoppers were packed into the Wal-Mart alongside shrink-wrapped merchandise, including toys, that was not to be unveiled until 5 a.m. Most of the low prices had an expiry time of 11 a.m.
“The economy has affected my shopping,” said Patricia Foy of Cincinnati who had been at the store since 11:30 p.m. Thursday with her three daughters and four granddaughters. “I wanted to get out and get the good prices.
“I’m mostly shopping for my kids and grandkids, but I also decided to treat myself this year, because I’m one of the lucky ones. I’ve still got a job.”
After suffering the worst sales decline in several decades last holiday season, the good news is that the U.S. retail industry is heading into the Christmas selling period armed with lean inventories and more practical goods on their shelves that reflect shoppers’ new mood.
The promotional blitz typical for the traditional start of the holiday shopping season has high stakes for retailers who’ve suffered through a year of sales declines. It’s also important for the broader economy, which could use a kick-start from consumer spending.
With files from The Associated Press (more…)
CN engineers go on strike November 30, 2009
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Locomotive engineers at Canadian National walked off the job early Saturday after last-minute negotiations collapsed just before a midnight Friday strike deadline.
The two sides had begun talks at noon in Montreal at the invitation of federal mediators.
Teamsters union spokesman Stéphane Lacroix had said there was a possibility the strike could be postponed if the railway agreed to negotiate and not impose a 1.5 per cent wage increase and revised distance caps.
The strike by the 1,700 engineers could affect service, but analysts believe the railway can continue to operate since many of its supervisors and managers are qualified engineers.
Via Rail said earlier that its passenger service would be unaffected by a strike.
In the Montreal region, the Metropolitan Transport Agency said a strike would force the cancellation of service on its Montreal/Deux-Montagnes and Montreal/Mont-Saint-Hilaire train lines.
In a statement, the agency said it was seeking a court injunction to block a strike, calling it “unacceptable” that service for 38,000 commuters a day could be “held hostage” by a labour conflict.
In the event of a walkout, the agency said it would try to arrange for shuttle service for commuters, starting Monday.
The most recent strike at CN ended after more than two months in 2007 when Parliament enacted back-to-work legislation affecting 2,800 conductors represented by the United Transportation Union.
With files from The Canadian Press (more…)
Canada posts current account trade deficit in Q3 November 28, 2009
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Canada posted a record trade deficit in the third quarter of 2009, according to Statistics Canada figures released Friday.
The national statistical agency said Canada produced a current account deficit of $13.1 billion for the July-to-September period, mainly because the country bought more products from other countries than Canadian companies were able to sell overseas.
“A widening in the goods deficit more than offset a marginal narrowing in the services deficit and smaller investment income shortfall,” said Dawn Desjardins, assistant chief economist for RBC Economics Research.
Canada still sold more widgets to the United States than the country’s businesses and individuals purchased from the world’s biggest economy, Statistics Canada said.
But that surplus shrank as Canada’s import bill rose in the third quarter.
“Geographically, Canada continues to record a surplus on goods trade with the United States; however, this bilateral surplus continued to narrow in the third quarter, as Canadian imports from the United States advanced at a faster pace than Canadian exports to American markets,” Statistics Canada said.
Trade balance
A country’s current account position measures its sales of goods and services to foreigners and money inflows to the domestic economy compared to the same country’s purchases of goods and services from other nations and investment outflows to foreigners.
In the third quarter, Canada sold $90 billion in goods outside the country while purchasing $94 billion in foreign products. That resulted in a deficit in this category of $4 billion.
Canada also posted a $5.6-billion deficit on the service side of the trade ledger in the three-month period.
By contrast, Canada received $8.5 billion in repatriated profits and interest payments on foreign investments in the period versus the $8.1 billion in interest and earnings sent outside of the country.
The country’s deficit trade, which appeared in the third quarter, can act to reduce the value of the Canadian dollar. That is because more Canadians will be switching their dollars for other currencies in order to buy foreign goods and services.
The rise in imports purchases also can slow economic growth, said RCB.
“The rapid rise in imports in the third quarter points to the trade sector acting as a significant drag on the pace of GDP growth. RBC estimates that net exports trimmed 4.2 percentage points from the quarterly economic growth rate,” said Desjardins.
Potash worker killed by bin collapse November 28, 2009
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An employee died when an above-ground storage bin designed to hold up to 800 tonnes of ore collapsed at the Mosaic Company’s K2 potash mine near Esterhazy, Sask., seen here in 2006.(Troy Fleece/Canadian Press)
A worker died early Saturday morning when a large storage bin broke apart and buried him in potash ore at a Mosaic Company facility near Esterhazy, Sask.
Another worker is in hospital with injuries from the accident, which took place around 2 a.m. Saturday. It was not known how serious the injuries were, but it was expected the worker would survive.
“A bin failed, and subsequently the potash poured out of it at that time,” Chandra Pratt, the human resources manager for Mosaic in Esterhazy, told CBC News.
The storage bin is located above ground and is associated with the Mosaic Company’s K2 potash mine. Esterhazy is about 225 kilometres east of Regina.
“Two of our employees were in the area at the time,” Pratt explained. “One worker was taken to hospital and the second worker unfortunately died at the scene.”
Pratt said both the workers involved are from Esterhazy area. Family members of the dead employee have been notified and are being assisted by a counsellor, Pratt said.
A family member who contacted CBC News said the man who died is Tom Merrit and he is married with two children. The family member did not have an exact age but thought Merrit was in his early 30s.
Pratt could not confirm the name of the man who died. “Our deepest sympathy goes out to the employee’s family and friends,” she said.
There was no information available on the identity of the injured worker.
Other workers rushed to help
Pratt said fellow workers on the overnight shift were nearby when the accident occurred and immediately rushed to the scene of the collapse.
“Their crew was quickly deployed at the time and quite quickly pulled the one worker out of the debris,” Pratt said. “Unfortunately, the other fellow wasn’t as easy to get to.”
The storage bins hold an estimated 800 tonnes of potash ore. The material is still in a raw form and is not yet processed.
When asked whether the company had ever had troubles with the bins before, Pratt said: “Not like this, no.”
The collapsed bin was one of several bins at the mine site. Pratt did not have an exact count.
“The RCMP and the provincial mine safety unit have been contacted, and they’re on site conducting an investigation,” Pratt said. “We’re at this point assisting them with the investigation and the cleanup.”
Wal-Mart wins at Supreme Court November 28, 2009
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Canada’s top court has ruled that Wal-Mart Canada Corp. had the right to shut down a store in Quebec that had been unionized seven months earlier.(CBC)
The Supreme Court of Canada ruled Friday that Wal-Mart Canada Corp. was within its rights when it shut down a store in Jonquière, Que., that had been unionized seven months earlier.
“As of now, the highest court in the land has looked at this, as have other courts, and have said that as unfortunate as the situation was, Wal-Mart was not in the wrong to do what it did,” said Andrew Pelletier, vice-president of corporate affairs for Wal-Mart Canada.
In two related decisions, the country’s top court split 6-3 both times in favour of the company.
In September 2004, the United Food and Commercial Workers Union, Local 503, was certified to represent employees of the Wal-Mart store in Jonquière. However, attempts to reach a collective agreement failed.
On Feb, 9, 2005, the contract issue was sent to arbitration, but that same day, Wal-Mart told the workers it was closing the store. The store eventually closed on April 29, 2005, putting approximately 190 employees out of work.
The company said the store wasn’t profitable, but appellants said the employer shut it down in response to the labour dispute.
In the case of Gaétan Plourde against the company, he had argued that he lost his job at the store because of his union activities. However, the Supreme Court concurred with earlier decisions by Quebec’s Commission des relations du travail (CRT), the Quebec Superior Court and the Quebec Court of Appeal in ruling in favour of the company.
In the case of Johanne Desbiens, Ingrid Ratté and Claudine Beaumont against the company, the majority of the Supreme Court justices found that the Quebec Court of Appeal erred when it overturned a decision of the Commission des relations du travail.
However, as Justice William Binnie wrote in the majority Supreme Court opinion, as a practical matter it would be a waste of the parties? time and money to send the case back to the CRT.
“The outcome would not be in doubt,” Binnie wrote. “The Jonquière store is closed and there is no possibility of reinstatement of the employees.”
Bernard Philion, a Montreal lawyer who pled the case for some former Wal-Mart employees, said the court’s ruling is disappointing for his clients. But he said some employees do plan on arguing their case under other provisions in the labour law in Quebec’s Superior Court.
“They have other recourses pending and I think that this decision gives them great possibilities,” he said.
Louis Bolduc of the United Food and Commercial Workers Union also said the top court’s decision opened a door because a labour board will now be able to investigate the reasons for store closures.
“If we can prove the reasons are anti-union then we can sue for damages,” he said in a Montreal interview.
With files from The Canadian Press (more…)
Xmas tree rental firms hope to stop waste November 28, 2009
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Potted Christmas trees are being sold as eco-friendly holiday adornments. This Carbonsync tree is sized for condos.(Carbonsync)Two Vancouver-area firms are hoping to capitalize on the concept of a “green Christmas” by renting out live potted evergreens for the holidays.
For about $100, both firms ? Carbonsync Christmas in Squamish and Evergrow Christmas Trees in Burnaby ? will drop off an evergreen at your door and then pick it up at the end of the holiday season.
Christmas trees that are cut down, by comparison, sell for $25 and up and are usually turned into mulch following the holidays. That’s a huge waste, Brad Major of Carbonsync Christmas told CBC News.
“What they’re doing now is they’re growing these hordes of trees everywhere in the Fraser Valley to ship in to Vancouver,” said Major.
“These trees grow anywhere from six to 12 years to be used for one Christmas, and all these trees go to the landfill, and it’s this huge pile of trees,” he said. “It’s like the biggest waste of a resource.”
After Christmas, the potted trees will be given to habitat restoration groups for replanting, said Major.
In Burnaby, Evergrow Christmas Trees is new to the potted-tree scene. It was started this year by two forestry graduates from the University of British Columbia, Sean Macalister and Jeff Ferguson.
For Macalister, it’s a return of sorts to a family tradition. He remembers Christmas always being celebrated with a live potted tree that was planted in the backyard afterwards.
Evergrow Christmas Trees was started by UBC forestry graduates Sean Macalister and Jeff Ferguson. (CBC) “This tree can be used over and over and then it gets planted after and it grows into a full-sized tree that will be here when we’re dead,” Macalister said.
His firm plans to return the trees to a nursery to be cared for until they get rented out again, and Macalister envisions families re-using the same trees Christmas after Christmas.
