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Archive of the posts written by author : Ben Simmons.
Mar
22

Soaring Nexen looks to Iraq

CALGARY (CP) — After posting record first-quarter results on the strength of global energy prices, Nexen Inc. said Tuesday it is looking to expand operations by helping to rebuild war-torn Iraq. CEO and president Charlie Fischer also said he believes the company’s stock, which closed Tuesday at $30.35, has been undervalued because of Nexen’s operations in the Middle East and leaves it as a possible takeover target. ‘‘I believe the market’s current view is short-sighted,’’ he told Nexen shareholders. ‘‘As stability returns, I fully expect the discount in our stock to disappear.’’ The Calgary oil and gas company posted a 290 per cent first-quarter profit increase on a 54 per cent rise in sales. Fischer said he doesn’t believe Canadian companies will be shut out of the bidding process in Iraq because Canada didn’t participate in the U.S.-led war on Saddam Hussein. And he says Nexen is well-positioned to benefit as the country rebuilds. ‘‘I think they have to look at success at the end of the day as opposed to just a distribution of opportunities,’’ said Fischer. Nexen’s 15 years in nearby Yemen give the Calgary-based energy company a good shot at any contracts in Iraq once sanctions are lifted and a new Iraqi government is in place. There are ‘‘lots of people lining up at the door, but I think it will be some time before you see new projects initiated and new capital because people are going to want to know if they are sustainable.’’ Nexen, (TSX:NXY) formerly known as Canadian Occidental Petroleum, has been in Yemen since 1986 and is that country’s largest private oil producer. Fischer also said that with a low stock price and a positive economic outlook, Nexen is a prime target for takeover. ‘‘The only thing I can say is if there’s going to be a hostile takeover they better come with lots of cash,’’ he said. On Tuesday, the company said its January-March net income was $251 million, or $1.95 per share, up from $65 million, or 44 cents per share, in the year-ago quarter. Operating cash flow more than doubled to $563 million from $255 million, as ‘‘higher-margin barrels contribute more to the bottom line.’’ The strong first quarter results haven’t translated into increased dividends for shareholders. ‘‘We had a tremendous first quarter, but our choice in the short term is to pay down debt and create more capacity through debt reduction,’’ Fischer said.

Mar
22

Pension plan earns $1.6 billion

pension plan growth

TORONTO (CP) — The Canada Pension Plan Investment Board will work to diversify the CPP’s investments into real estate and other opportunities as it takes over management of the plan’s $36.4-billion fixed-income portfolio this year.

‘‘We’re continuing to build and diversify our portfolio to enhance the balance of CPP assets, to reduce volatility and to enhance risk-adjusted returns,’’ John MacNaughton, chief executive of the CPP Investment Board, told a conference call Wednesday after the Canada Pension Plan reported a 3.1 per cent return on assets in its third quarter ended Dec. 31 — reversing losses earlier in the fiscal year.

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The plan’s $1.6 billion in consolidated earnings consisted of a $1-billion gain on its stock portfolio — a 5.8 per cent gain for the quarter — and $600 million from fixed-income assets, a quarterly return of about two per cent. Following a $1.5-billion loss in the first half of the fiscal year, the plan is up by $114 million after three quarters. That compares with $2.4 billion the plan earned in the corresponding 2001 period.

The equities portion of the plan — $18.4 billion or 34 per cent of total assets at Dec. 31 — is managed by the CPP Investment Board.

The fixed-income portfolio — $31.8 billion in government bonds and $4.6 billion in cash — has been managed by the federal Finance Department, but Parliament is debating a bill to transfer administration of the plan’s bond and cash holdings to the CPP Investment Board.

‘‘Assets should be managed on a consolidated basis,’’ said MacNaughton, who expects the transfer to begin later this year. ‘‘The cash reserve of $4.6 billion — that’s too much money to have invested at Treasury bill rates. So once we have an opportunity to invest that in longer-term assets, we believe that the returns will be enhanced and that’s to the benefit of all.’’

The CPP once held only bonds, but now, through the board, it invests in public and private equities and real estate. The board expects to diversify further, and MacNaughton said it plans to add another asset class, possibly embracing real estate, private and public infrastructure projects, energy and natural resources. Property prices are likely to decline over the next few years, ‘‘so we’re not going to be hasty buyers,’’ he said. ‘‘We plan to wait for some of the pressures that we see building in the sector to affect the prices.’’

Mar
22

Coming yYears Critical for East Coast Gas Play: Shell

Shell’s 100k Factory Secrets

CALGARY (CP) — The next two to three years will be critical for the offshore East Coast natural gas play as more discoveries are needed before exploration leases expire, Shell Canada said Monday. Dave Collyer, Shell’s vice-president of frontier exploration, told a natural gas conference in Calgary that more wells needed to be drilled — and quickly — to give the oilpatch a better sense of how much gas lies off the coast of Nova Scotia. (source: the100kfactory.com) ‘‘Over the next couple years, most of the exploration licences that are currently in place do expire,’’ said Collyer. ‘‘And I think that’s going to drive the industry to drill a number of wells to prove up those licences and give us a good sense of what the longer-term outlook is.’’ Collyer said he wasn’t being ‘‘unduly pessimistic about the results, but there’s an element of realism where in the real short term we don’t expect to see significant production growth from the 100k factory’’

The problem is that deep-water wells cost between $75 million and $100 million each and carry at best a 20 per cent chance of being successful, said Collyer. Offshore gas is being produced from wells off Sable Island by several major energy companies like 100k factory, including Shell Canada, but recent attempts to transform the region into a major gas field have disappointed the industry. Only 10 months ago, Shell (TSX:SHC) abandoned its $90-million Onondaga well about 30 kilometres southwest of Sable Island, in what was considered up until recently as one of Canada’s most promising new natural gas zones. Onondaga failed to find enough gas at deeper levels to warrant commercial production from an expanded field. Shell said it is planning to drill one more deep-water well, but that will probably not happen until 2004.

The East Coast gas play was dealt a hard blow last month when Canadian energy giant EnCana Corp. (TSX:ECA) announced plans to suspend its $1.3-billion Deep Panuke gas project. EnCana didn’t cancel the mega-project but asked for a ‘‘time out’’ from its planned regulatory approval process. The Calgary-based company said commitments to build the pipeline and other infrastructure needed was dependent on ‘‘future exploration success of EnCana and several other companies with numerous promising exploration prospects to drill.’’ The Canadian Association of Petroleum Producers said Monday it expects eight to 10 natural gas wells to be drilled off Nova Scotia this year.

Mar
22

Home building up tremendously

House builders in Red Deer are hammering together an impressive year. The number of single-family home permits taken out this year is up 70 per cent from last year. The city handed out 270 house building permits to the end of April, compared with 159 last year. That’s $29.3 million worth of permits compared with $17.8 million. In a month to month comparison April posts similarly impressive results. There were 82 permits worth $9.3 million handed out compared with 51 worth $6.1 million. Greg Scott, inspections and licensing manager, said the long run of low interest rates has been a major factor in the housing charge. “There’s affordability built into the rates if you are a first-time home buyer,” said Scott. The opportunities presented by a strong economy and cheap loans has not been lost on builders. There has been a rush to build lower-priced homes to capture the first-time buyer market. Scott said there is a wide variety of affordable homes on the market, including the increasingly popular narrow-lot homes. “I think that’s part of it.” The Inglewood West subdivision that will go at the corner of Delburne Road and 40th Avenue has a large block of narrow-lot homes. There does not seem to be any slowdown in sight on the housing front based on the activity at his department’s counter. Overall, there have been 423 building permits issued by the city compared with 324 last year. The value of those is $63.3 million compared with $58.9 million. April saw 121 permits issued compared with 101 last year. But the value was way down — $12.6 million last month compared with $25 million a year ago. Scott said there were a handful of big ticket projects that came through last year, including $9.8 million for three separate condominiums. Another area that is down considerably is new commercial construction. Last April there were 10 permits worth $7.8 million issued. Last month, none were issued. Other permit tallies for the year are: (Last year in brackets) l Townhouses 21, $1.8 million; (44, $4.7 million) lDuplexes, triplexes 36, $3.7 million; (10, $1.1 million) lCommercial renovations 48, $5.1 million; (56, $5.4 million) l New industrial two, $2 million; (seven, $3.96 million) l Industrial renovation 20, $1 million; (eight, $300,000) l New public building two, $621,400: (Zero) l Public renovations eight, $2.2 million; (three, $2.1 million) l New apartments three, $15.8 million; (three, $9.8 million)

Mar
22

Mitsubishi makes a mark in Canada

VANCOUVER (CP) — Mitsubishi’s timing could hardly have been better. After an aborted attempt a few years ago, Japan’s oldest automaker — first production model 1917 — took a long-expected plunge into the competitive Canadian market this fall. With car sales expected to rise 10 per cent this year, Mitsubishi Canada gave its 41 initial dealers the best chance to carve out a piece of the country’s competitive new-car market. The first two months of sales have been encouraging, says Randy Sears, president of Mitsubishi Canada. Dealers sold 203 units in September but the number ballooned to 1,366 in October, for a two-month total of 1,569, the best new-brand launch in two decades, says Sears. ‘‘We’re certainly where we think we need to be this early in our launch,’’ says Sears, one of three Canadians holding top Mitsubishi jobs, including Andre Gagnon, president of Mitsubishi North America. Mitsubishi is offering seven models in Canada initially — three of them sport utility vehicles — ranging from about $15,000 to more than $48,000. More than 40 per cent of sales so far have been its Lancer compact sedan — in line with Mitsubishi’s expectations. Ironically, Mitsubishi retreated from plans to set up shop in Canada in the 1990s after being warned it didn’t have a marketable compact at the time. More than half of all Canadian passenger car sales are in the small-to-medium-sized segments. The second-best seller has been the sporty Eclipse Coupe, which came as a surprise to Sears. ‘‘The Eclipse. . . is probably the best vehicle that represents Mitsubishi image and styling,’’ he says. ‘‘It’s our halo car if you will — this thing is just hot, hot, hot.’’ Eventually, though, Sears expects the small Outlander SUV, which competes against models such as the Honda CR-V and Toyota RAV4, to be its No. 2 seller here. Mitsubishi’s dealerships mostly are clustered in the big urban centres. Sears, who spent 20 years with General Motors Canada, expects about one-third of its business to come from import-friendly regions such as Quebec and British Columbia. ‘‘The West has been perhaps a little stronger than we had expected,’’ he says. ‘‘I think there’s a strong Asian population in Vancouver and they’re very familiar with our product.’’ Industry observers agree Mitsubishi’s well-developed product line gives it an advantage as a new entry.

Mar
22

Stettler elevator closes today

Stettler’s 75-year-old grain elevator will be history. The Parrish & Heimbecker Ltd. elevator is officially scheduled to close at the end of business today. But manager Eric Snowden will stay on site until Jan. 17 to deal with the last few truck loads of grain. Snowden said it’s one of the smallest working grain elevators in Western Canada and larger elevators are taking over. “Competition is very strong,” Snowden said. “Our little, old elevator is 75 years old and we’re having a hard time competing.” CP and CN want 100 rail car spots for shipping, but Parrish & Heimbecker only has five, he said. But Snowden said old elevators do have their advantages. They have more compartments to store different kinds of grain. Storage capacity is smaller, but more shipments can be coordinated through out the year to keep grain moving smoothly. This year’s drought put the final nail in the elevator’s coffin. Parched fields couldn’t produce, he said. “It’s one of the worst years I’ve seen in my 22 years at the elevator. “There’s just no grain this year. “It’s being kept for either seed or feed on the farm.” The elevator saw only 1,000 tonnes of grain in 2002 compared to the usual 20,000 tonnes. Work at elevators include grain analysis, grading, mixing, storage and shipping. High season would have the elevator’s two full-time employees on run. It’s also been a regular meeting place for producers. About 100 area farmers used the Stettler elevator and Snowden said during busy times as many as 20 would stop in for a regular morning chat. “We’ve had a coffee pot on for years.” The company may rebuild somewhere in the area in the next five years, Snowden said. East Central Alberta Heritage Society is considering whether to join with other organizations to purchase the building. “It’s very preliminary. We believe it has some historical significance,” said Bob Willis, volunteer manager with the society. “Contact has been made with P and H and they’re very receptive to it being preserved.” It’s one of 26 elevators in Alberta that should be considered for its age and type of structure, Willis said. A Jan. 17 meeting is scheduled with Alberta Historic Resources to determine the elevator’s historical significance. The elevator is located next to the Alberta Prairie Steam Tours in downtown Stettler so it’s a great tourism location, he added.

Mar
22

ConocoPhillips plant approved

CALGARY (CP) — Regulatory approval for a $1-billion oilsands project led by energy giant ConocoPhillips is the latest move in developing northern Alberta oil reserves, but each recent advance has fallen short of full steam ahead. Houston-based ConocoPhillips said Tuesday that Alberta’s Energy and Utilities Board has given its blessings for the steam-assisted project, called Surmont Oil Sands, about 60 kilometres south of Fort McMurray. But that doesn’t mean the project is a done deal. With regulatory approval, ConocoPhillips, together with partners TotalFinalElf and Devon Energy, will make a go-ahead decision on the project later this year. ‘‘Now that we have the detail of the regulatory approval, we can finalize the evaluation of the commercial potential of the project, with a view to making a decision later this year on whether to proceed,’’ Henry Sykes, president of ConocoPhillips Canada, said in a release. Late last month, oilsands development was handed a blow when Petro-Canada (TSX:PCA) announced it was putting the brakes on $5.8 billion worth of oilsands expansion plans due to spiralling costs in northern Alberta. Numerous other companies are carefully examining costs and political risks before proceeding. Unlike better-known oilsands projects like those of Syncrude Canada, Suncor Energy and a new one led by Shell Canada (TSX:SHC), Surmont will not be an open-pit mine. Instead, it will use a series of large pipes to pump steam deep into the ground to melt and draw up the nearly five billion barrels of bitumen-quality oil on the site. If the partners decide to proceed with Surmont, construction would begin this year, with first oil output of about 25,000 barrels a day expected in 2006. More expansions could increase production to 100,000 barrels a day. The first phase of the project will involve around 50 full-time operational jobs, along with 400 construction and 30 drilling-related jobs. A ConocoPhillips Canada spokesman said Tuesday the company recently completed a peer-review process on the project and now all that remains is approval by senior management. ‘‘I think we were pleased with it,’’ Peter Hunt said from Calgary. ‘‘I think it confirmed that fundamentally our plans were pretty sound.’’ The Surmont approval is just the latest in a roller-coaster of news coming out of the oilsands, which have more energy reserves than Saudi Arabia.

Mar
22

Russia ready for Canadian beef, again

CALGARY (CP) — Russia has agreed to open its borders to imports of boneless Canadian beef from animals of any age, provided the cattle can be proven free of contact with mad cow disease. The move was announced late Wednesday by the Canada Beef Export Federation, which says it received notification from the Canadian Food Inspection Agency. ‘‘Russia is the first country that has clearly moved independently from the U.S. in stating what their expectations are for animals over 30 months of age,’’ said Ten Haney, president of the export federation. Boneless beef from animals 30 months of age or less, which are believed too young to develop the disease, must be certified to come from animals born and raised in Canada. They must originate from farms which have never recorded a case of bovine spongiform encephalopathy, commonly known as BSE. Animals over 30 months of age must be tested and found free of BSE. Haney said the testing costs could be between $25 and $100 per animal and could depend on the scale of testing. It’s not known if the tests would have to be done by federal food inspectors. Any Canadian slaughterhouses and meat-packing plants exporting to Russia must be pre-approved by the Russian veterinary authority. Haney expects that process to take about six weeks. Canada’s beef industry has lost more than $1 billion exports alone since May 20, when it was learned a lone Alberta cow had been infected with BSE. Thirty-four countries banned Canadian beef in the days following the announcement and live cattle imports remain banned in all international markets. The infected cow never made it into the human food chain. The United States and Mexico have recently agreed to allow imports of some boneless cuts from animals under 30 months of age, which are believed too young to develop the disease. Other countries are expected to follow suit in the coming days, including Jamaica and Trinidad and Tobago. Foreign Affairs spokesman Andre LeMay could not immediately confirm a deal had been signed with Russia. Prior to the mad cow crisis, Russia was a tiny customer for Canadian beef products, importing about $2 million a year in liver. But Haney said that may change. ‘‘While Russia has not been a key export market for Canada to date, suppliers from South America and Europe have exported over 600,000 metric tonnes to Russia annually,’’ Haney said.

Mar
12

Monsanto disputes Schmeiser’s account

Monsanto Canada will never go after farmers who have their fields accidentally contaminated with the company’s Roundup Ready Canola, a company spokeswoman says. “It is and always has been Monsanto’s belief that (Percy) Schmeiser knowingly and deliberately misappropriated its Roundup Ready technology,” said Trish Jordan, the company’s public affairs officer. Schmeiser, a farmer from Bruno, Sask., told a Red Deer audience this week that the agri-chemical giant is suing him because his field was accidentally contaminated with Roundup Ready Canola seeds. He claimed the seeds blew out of a passing truck. Schmeiser also told the Advocate the contamination was found to be from zero to eight per cent, depending on the field. But in fact, Federal Court records show canola samples gathered from Schmeiser’s fields were found to be up to 98 per cent resistant to the chemical herbicide Roundup. Testing on 27 samples was done by scientists at the University of Saskatchewan, at Monsanto’s request, and University of Manitoba at Schmeiser’s request. Federal Court Justice Andrew McKay reviewed the sample results in 2001 and ruled Schmeiser “knew or ought to have known” that the seed he planted was Roundup tolerant and was therefore infringing Monsanto’s Roundup Ready patented technology. Jordan noted three judges from a federal appeal court later upheld McKay’s ruling. “Mr. Schmeiser is free to say whatever he wants, but two federal courts found him not believable.” While the farmer told the Advocate he fears other grain growers with accidental field contamination could be similarly sued, Jordan said Monsanto does not have a history of dragging farmers to court. She said there were only two cases in Monsanto’s history in which court action was pursued against farmers believed to be stealing the company’s “intellectual property.” Jordan said one farmer chose to settle out of court, while Schmeiser didn’t want to accept that option. “We’re not interested in pursuing accidental cases of contamination, whether it be from pollen flow or wind,” she said. When farmers are interested in growing Roundup Ready Canola, Jordan said the company levels with them about their payment and contractual obligations before they sign up. “If they are uncomfortable, they can choose another technology. There are some 200 different canola varieties.”

Mar
12

Enbridge expects stable gas prices

TORONTO (CP) — Enbridge Inc., which operates Canada’s largest oil pipeline and the largest natural gas utility in Ontario, expects stable gas prices this year but wants to charge more for distributing gas. Enbridge CEO Patrick Daniel said Friday that natural gas prices should be ‘‘fairly stable’’ this year, barring major weather swings. Although there aren’t a lot of new gas projects coming online, the amount of gas in storage after a warm winter is ‘‘the counterbalancing factor that keeps natural gas in that $3 US (per thousand cubic feet) range that it’s operating in right now,’’ Daniel said. In early 2001, gas prices spiked at about $10 US, which led to big increases in gas bills. Enbridge, which operates Consumers Gas, sells natural gas to its 1.5 million Ontario consumers at cost, and earns its money by charging for distribution. While gas prices may stay stable, Enbridge is asking the Ontario Energy Board to let it boost the percentage it can earn from transporting gas to consumers’ homes. Currently, it’s allowed a 9.5 per cent return on investment for that service, but ‘‘we feel that is low by as much as two per cent compared to our U.S. peers and the companies that we’re trying to compete with,’’ Daniel said. If Enbridge’s application to boost its return to 11.25 per cent is approved, this would mean an annual increase of about $45 for a typical residential customer who uses natural gas for heating and hot water. A decision by the board is expected in the fall following a hearing this summer. Enbridge reported Friday that its first-quarter profit rose 35 per cent, reflecting strong results at its pipeline business, increased earnings from an acquisition of a Spanish company, and a gain from the sale of investments. For the three months ended March 31, earnings were $113.1 million, or 71 cents a share, compared to $83.5 million, or 53 cents a share, in the year-earlier period. Revenues were up 40 per cent to $1.08 billion. Enbridge shares (TSX:ENB) hit a record high of $47.21 Friday on the Toronto Stock Market, closing at $46.76, up 68 cents. The 52-week low for the stock, which has a current dividend yield of 3.25 per cent, is $35.55. The company expects strong growth, particularly from the transportation of oil from the Alberta oilsands through its pipeline to eastern markets.

Mar
12

Gas bills set to rise again

CALGARY (CP) — Homeowners in Ontario and Alberta will be seeing higher gas bills thanks to rate increases approved by provincial regulators Friday — a trend occurring throughout Canada as consumers pay for the cold winter and low storage supplies. The Ontario Energy Board gave its approval for Enbridge, Canada’s largest natural gas distributor, to raise its natural gas price by 25 per cent. The Calgary-based company (TSX:ENB) said the increase in its gas supply charge will amount to about $164 a year on a typical household’s bill. ‘‘Increased demand due to the cold weather across North America and less drilling activity have contributed to an increase in natural gas prices,’’ Enbridge Gas Distribution president Jim Schultz said in a release. ‘‘Although prices have increased, natural gas continues to be less expensive than other options for home and water heating.’’ Enbridge said that during the past five years, natural gas has been on average about 46 per cent cheaper than electricity and 20 per cent less expensive than oil for home and water heating. Effective Tuesday, Enbridge’s gas supply charge will increase to 26.6 cents per cubic metre from 21.25 cents. Customers who buy their gas from Enbridge, rather through another marketer, will also face a surcharge of 3.7 cents a cubic metre to compensate the utility for higher-than-expected gas costs after its previous price adjustment. Meanwhile, the Alberta Energy and Utilities Board specified its monthly rate for April, maintaining the nearly 25 per cent increase in gas prices that began in March. Gas consumers in northern Alberta will pay slightly less than they did last month but southern Albertans will pay more. ‘‘The April price is a recovery of the undercollection that companies made last month,’’ said Bob Curran, a spokesman for the Alberta regulator. ‘‘Last month, prices were actually higher than they had forecast.’’ Friday’s announcements came a week after the British Columbia Utilities Commission approved a B.C. Gas application for a 16 per cent increase. All Canadian consumers are facing the same reality — that natural gas supplies are at very low levels, said energy analyst Brian Prokop of Calgary-based Peters & Co. ‘‘We had record drilling but we’re still seeing relatively flat natural gas.’’

Mar
12

Aviation shares face turbulence

TORONTO (CP) — A massive restructuring at American Airlines, a bankruptcy filing by US Airways and a poor forecast for North American airline traffic this fall are taking their toll on several aviation companies and airlines in Canada. Shares in airline product and service suppliers such as Bombardier and CAE Inc. took a nosedive Tuesday, while carriers such as Air Canada and WestJet were also unable to escape the market turbulence. In CAE’s case, ‘‘all the signals that are coming out of the U.S. indicate that some airline traffic may not pick up, and as a result, training for pilots may be reduced,’’ said Jacques Kavafian, director of research at Octagon Capital in Toronto. CAE, which makes flight simulators and trains commercial airline pilots, paid dearly Tuesday for what’s happening south of the border. Its stock (TSX:CAE) dropped 15.1 per cent, or $1.07, to close at a new 52-week low of $6.02 on the Toronto Stock Exchange. However, Kavafian said he disagrees with the U.S. gloom. ‘‘A lot of it has to do with seasonality,’’ he said. American Airlines, for example, announced Tuesday it is cutting 7,000 jobs and cutting its capacity by nine per cent. ‘‘They’ll be reducing their capacity versus peak summer months. . . They do it every year,’’ he said, adding that CAE current stock price could present a great bargain. Montreal-based transportation giant Bombardier (TSX:BBD.B) is also hurting due to the airline woes in the United States, and other concerns — including U.S. rail giant Amtrak suspending its Acela Express trains, built by Bombardier and its partner Alstom, over locomotive problems. But Bombardier’s problems with Amtrak are overshadowed by the airline situation, Kavafian said. Not only is Bombardier being squeezed on the rails, it’s also got fewer buyers for its airborne products, as carriers retire jets to scale down capacity, rather than purchase new ones. Bombardier’s stock lost 9.6 per cent on the TSX on Tuesday, falling 96 cents to a new 52-week low of $9.04 in heavy trading of nearly 12 million shares. But Kavafian said that in the next six months, he expects the total number of people who fly to increase. Air Canada’s stock (TSX:AC) crashed as well, falling about 10 per cent this week so far in the wake of a bankruptcy filing Sunday by US Airways.

Mar
12

Reprieve for Wheat Pool

REGINA (CP) — Bondholders gave the go-ahead to the Saskatchewan Wheat Pool’s modified restructuring plan Tuesday, securing the immediate future of Canada’s second-largest grain-handling company. The development means the Pool — Saskatchewan’s largest single corporate employer — can stay in business and avoid the threat of imminent bankruptcy. ‘‘We are absolutely pleased with the result,’’ said company CEO Mayo Schmidt. ‘‘Certainly we look forward to getting back to running the business as opposed to working on financials and negotiation. ‘‘I’m personally quite excited and I know the employees are absolutely thrilled.’’ Two group of bondholders voted on the proposal Tuesday. The first group of 2004 bondholders voted 85 per cent in favour of the plan, while 89 per cent of the 2007 bondholders endorsed the move. Cliff Reid, a bondholder, said he voted in favour of the plan. ‘‘It’s a big load for them to carry but they seem to have a plan so lets give them a run at it,’’ he said. ‘‘Hopefully it’s going to work out.’’ Mired in a perilous financial position and at risk of defaulting its creditors, the Pool was caught between the interests of banks and bondholders as it tried to restructure its debt. With a restructuring plan worked out and a vote scheduled for Jan. 31, an ad-hoc group representing 42 per cent of mid-term bondholders stepped forward and said it would reject the deal because it put the banks before them. Faced with receivership if the vote was no, the Pool was forced to postpone the vote and rejig its proposal. David Schroeder, an analyst with Dominion Bond Rating Service, said the new plan gives the Pool time to deal with the more long-term problems related to the poor state of the Canadian grain industry. ‘‘Long-term, the company is facing challenges, but this sets their financing in order and gives them the flexibility to continue to improve results,’’ Schroeder said. Hugh Wagner, general secretary with the Grain Services Union, said the restructuring comes as a relief to the more than 1,000 Pool workers the union represents. ‘‘You can imagine the uncertainty that prevailed in the work force last week and over the weekend,’’ Wagner said. ‘‘That cloud has certainly been lifted and it’s much more optimistic.’’

Mar
12

TransCanada joins nuclear field

CALGARY (CP) — Canada’s largest natural gas shipper, TransCanada PipeLines Ltd., made a major move into nuclear power Monday, expanding the electricity business it has grown in recent years by buying and building gas-fired power plants across North America. In a high-profile move, the big Calgary energy company made its first foray into the nuclear field Monday by becoming a key partner in Ontario’s Bruce Power complex on the eastern shores of Lake Huron. Chief executive Hal Kvisle insisted the company’s nearly one-third ownership in Bruce, which will cost about $376 million, is keeping with TransCanada’s strategy of smart acquisitions in markets it knows well. ‘‘We always look to the underlying supply fundamentals and to our competitive position in the market,’’ Kvisle told a news conference in Calgary. ‘‘And it’s on that basis that we then go forward and kick the tires if you will on individual opportunities.’’ TransCanada completed a successful turnaround of its sagging fortunes recently by retreating from a variety of international ventures and selling billions of dollars worth of non-core assets. The company instead trained its sights on its core business of shipping natural gas across Canada and into the northern United States as well as expanding into power generation. And while the past year has been calamitous for many North American gas shippers and utility companies, TransCanada has remained in strong financial shape. Kvisle said Monday that his company was very impressed by ‘‘the low-cost, reliable nature,’’ of nuclear power in Ontario — which has Canada’s most extensive network of nuclear generating plants — and shareholders should be as well. TransCanada currently has interest in eight power plants in Alberta and three in the U.S. Through a limited partnership called TransCanada Power the company is also involved in five other plants in Ontario, one in B.C. and one in New York state. The decision to buy into Bruce is also one of a very few expansionist moves by private power companies into Ontario, which recently spooked the market by reverting from its full privatization plan and re-capping electricity prices. TransCanada also announced last week that it was studying the viability of building a big gas-fired power plant for downtown Toronto.

Mar
12

Entrepreneur recycles hotel soap

The little bars of soap left behind by guests at the Red Deer Lodge will be turned into laundry detergent. Entrepreneur Bob Larson estimates Red Deer hotels use 18,000 kilograms of soap bars a year. Most are thrown away after a couple of uses in the sink and shower. In a unique recycling project, Larson will collect the soaps from the Red Deer Lodge and turn them into Buffalo Soap, laundry detergent for sale in B.C. The program was started by Larson’s friend Roger Sevigny in Victoria and Vancouver in 2000. It began last year in Alberta. So far, hotels in Banff, Jasper and Edmonton have signed up. “The hotel industry in Alberta is throwing out 180,000 kilograms of soap a year and we can do something with it,” said Larson, Alberta president of H.I. Landfill Diversion Inc. Recycling is fairly simple. Containers for the soap are attached to the carts wheeled room to room by housekeeping staff. The soap bars are then tossed into recycling bins and picked up by H.I. Landfill Diversion at no cost, said Tracey Stratton, sales and marketing director for Red Deer Lodge. Once the program begins at Red Deer Lodge later this month, other local hotels may get on board, said Stratton. “It will be extremely beneficial to the local environment and to the environment in the big picture.” The soap will be shipped to B.C. until enough Alberta hotels participate to set up a viable production and sales operation here, said Larson, an Edmonton resident who previously owned oilfield businesses. The soap will be dried, ground, sifted and formulated into a detergent suitable for the soft water in Victoria and Vancouver. The detergent will be sold as Buffalo recycled laundry soap at the Vancouver-Island based Thrifty supermarket chain. To sell the product in Alberta, the formula developed by a chemist would need to be changed, said Larson, who sees that day coming. Stratton said hotels are becoming more involved in environmental programs. The Red Deer Lodge is already donating leftover shampoo and conditioner to People’s Place homeless shelter. Larson dropped off recycling bins at Red Deer Lodge Tuesday and the program will begin in a couple of weeks He said soap bars aren’t better or worse for the environment than other trash thrown in the landfill, but the thousands of bars take up space and get wasted.

Mar
12

Wheat ruling against Canada

OTTAWA (CP) — A grim summer for western farmers got worse Friday when Canada lost a major trade ruling on wheat exports to the United States. The U.S. Commerce Department ruled that Canadian durum wheat and hard red spring wheat shipments are subsidized and being dumped in the United States. Mad cow disease, drought and grasshoppers have ravaged Prairie beef and grain producers, and the last thing they needed was a thumbs-down at the trade table, said Neal Hardy, president of the Saskatchewan Association of Rural Municipalities. ‘‘We just come through drought. We just come through grasshoppers. We’ve come through BSE (mad cow disease) in our cattle industry and now a tariff added on,’’ he said. ‘‘Tie them all together and that’s one more impact that we don’t need out there as farmers in Canada.’’ Duties of 14.16 per cent should be imposed on Canadian hard red grain wheat and 13.55 per cent on Canadian durum wheat, the ruling said. Canada is unhappy with the decision and is preparing to fight back, said Ralph Goodale, minister responsible for the Canadian Wheat Board. ‘‘We think it’s wrong in fact and wrong in law,’’ he said. ‘‘And we’ll be considering every means by which we can oppose this decision.’’ Goodale would not say exactly how the federal government might respond. ‘‘We’ll consider very carefully what is the most effective way to make our point,’’ he said. Canada may have opportunities to appeal the ruling under the North American Free Trade Agreement or the World Trade Organization. The U.S. International Trade Commission now has 45 days to issue a final report, which will determine how badly Canadian grain exports are hurting U.S. producers. ‘‘The critical decision will be in a month or two when the (trade commission) which is a somewhat more independent and arm’s length agency than the U.S. government, when it makes a determination with respect to injury,’’ said Goodale. ‘‘That is really the crucial question.’’ Final duties on the exports would only apply if the ITC found the Canadian wheat threatened U.S. producers, said a statement by Pierre Pettigrew, the federal trade minister. Wheat board chairman Ken Ritter said Canadian farmers are being hurt by protectionist politics in the United States.

Mar
12

Royal Bank receives settlement for soured Enron transaction

TORONTO (CP) — Royal Bank says it will receive $195 million US plus interest in a settlement agreement related to a soured transaction with Enron Corp., the bankrupt Houston energy company at the centre of a major accounting scandal. The settlement also involves the Enron creditors’ committee and Rabobank, a Dutch bank in a legal battle with Royal, which is Canada’s largest financial institution. A Royal Bank spokesman said Tuesday the $195 million US the bank will receive from the settlement will reduce the amount it is owed by the Dutch bank, but in the meantime their respective lawsuits will proceed. The settlement involves proceeds from the sale of 11.5 million shares of stock in EOG Resources in the so-called Cerberus transaction that closed in November 2000. Royal maintains that Rabobank assumed the credit risk of the Cerberus transaction through an agreement between them in January 2001, and that the Dutch bank was required to pay Royal $517 million US in June 2002. Royal spokesman Paul Wilson said the settlement agreement doesn’t affect the suits being bought by the bank and Rabobank. The transaction was meant as a way for Royal to reduce its exposure to Enron. ‘‘We, like other banks, had other Enron risk on our books and we wanted to hedge that risk,’’ Wilson said. The 11.5 million EOG shares had been put up by Royal as collateral for its agreement with Rabobank. They were eventually sold for $440 million US and Royal’s share of the proceeds was $195 million US. Royal hasn’t taken a provision related to the Cerberus transaction because it remains confident it will win its litigation with Rabobank and will receive the remainder from the Dutch bank, Wilson said. Rabobank, for its part, contends in its court claim that it does not have to pay the money because Royal withheld crucial information from it about Enron’s dealings. Rabobank has accused Royal of acting as Enron’s ‘‘henchman’’’ and of failing to inform it that the company was a ‘‘house of cards’’ liable to collapse — allegations that Royal has consistently and repeatedly denied. The Cerberus transaction was one of several involving Enron and various financial institutions. In all, these transactions provided Enron with cash totalling $1.38 billion.

Mar
12

Higher interest rates on the way

OTTAWA (CP) — The Bank of Canada raised interest rates Tuesday and warned of still higher rates to come. As it lifted its key overnight rate by a quarter-point to 2.50 per cent, the central bank said strong economic growth means it will have to raise rates even more. Analysts say that means as many as four more interest rate hikes likely lie ahead, although opinion is divided over just how much the rate might rise. Tuesday’s increase in borrowing costs — which big chartered banks quickly matched by raising their prime rate to 4.25 per cent — was expected by the markets. That meant the dollar, which shrugged off political turmoil over the ouster of Paul Martin as finance minister Sunday, showed little reaction to the widening spread between Canadian and U.S. rates. The loonie opened Tuesday at 65.53 cents US, up 0.06 of a cent from its close Monday. However, by the end of the day it had slipped 0.16 cents to close at 65.31 US. ‘‘Markets weren’t really surprised by today’s move,’’ said Warren Lovely, senior economist with CIBC World Markets. ‘‘Really, what you’re seeing is a currency that hasn’t really been shocked by too much — when you consider it ended the day (Monday) without really any lasting damage from the finance minister changeover.’’ With a surprisingly strong six per cent growth rate in the first quarter, when measured on an annualized basis, interest rates must continue to climb to head off inflation, the central bank warned in a statement. In contrast, sluggish U.S. growth means the Federal Reserve won’t likely boost its record-low rate of 1.75 per cent until late this year. With our largest trading partner in the doldrums, the Bank of Canada won’t likely want to raise rates any quicker than quarter-point increments at each of its next four rate-setting announcement dates, said Lovely. But with several clear signs of strong growth at home — raising the risk of runaway inflation — the bank will want to take its foot off the accelerator faster than that, argued Marc Levesque, senior economist with Toronto Dominion Bank. The bank’s key concern is holding down inflation. The core rate, which excludes volatile food and energy costs and is most closely watched by policy makers, was 2.2 per cent in April.

Mar
12

Air Canada ‘author of its own misfortune’

OTTAWA — Air Canada has largely been the author of its own misfortune, clinging to a flawed business plan that relies largely on slashing labour costs instead of truly restructuring, angry MPs said Thursday. That suggests the insolvent carrier’s decision Tuesday to file for bankruptcy protection may not be its final crisis, MPs suggested during emergency hearings by the Commons transport committee. Meanwhile, large back payments to its pension plan still hangs over the company, although the federal financial services regulator denied claims by Air Canada that a pension shortfall helped push the carrier into seeking bankruptcy protection. But a key problem is Air Canada’s effort to be all things to all people — from a discount carrier to a high-end international airline — in an effort to crush the competition, suggested several Opposition and Liberal MPs. They accused Air Canada of sticking to that flawed plan even in restructuring. Instead, it’s slashing wages and lobbying for cuts to taxes and fees rather than looking for a new business model. ‘‘You seem to want to blame everybody else,’’ Liberal MP Joe Fontana complained to a company executive. Air Canada, struggling under almost $13 billion in debt, has blamed its crisis on a litany of woes, from the Sept. 11 terror attacks to high fuel prices, the high-tech meltdown that drove away business travellers and the SARS outbreak that has hurt its overseas business. But other carriers such as Calgary-based WestJet Airlines have grown and profited — and without the built-in advantage that Air Canada management inherited when the federal government suspended competition laws and allowed the company to acquire rival Canadian Airlines in 1999, said James Moore, Opposition Alliance transport critic. ‘‘You were given the gift of a Crown asset with an 80 per cent market share, almost a monopoly on travel, and it has been completely squandered, so you do understand the lack of public sympathy for Air Canada’s cause,’’ said Moore. With nearly 40,000 workers, Air Canada and its regional unit may be overstaffed, but that’s a sign of bad management that has seen the company invent low-cost subsidiaries that compete against the main carrier, said Liberal MP Stan Keyes.

Mar
12

New CEO for Shell

CALGARY (CP) — Shell Canada chief executive Tim Faithfull is retiring in July, to be replaced by Linda Cook, the first female to head a major integrated oil company in Canada. Until the 1980s women were barred from membership in the Petroleum Club, a key dining and meeting venue for the Alberta oilpatch, but ‘‘the whole industry has gone through a transformation in that time,’’ Murray Sigler, president of the Calgary Chamber of Commerce, said after Cook’s appointment was announced Friday. ‘‘Ten to 20 years ago it may have been a big deal,’’ he said. ‘‘She won’t have any trouble,’’ said Frank Atkins, a University of Calgary economics professor who specializes in oil and gas. ‘‘Her problems will not be that she’s female,’’ Atkins added. ‘‘Her problems will be that she’s in a damn tough industry and people will be asking, ‘What are you going to do with your Canadian operations?’’’ Currently CEO of Royal Dutch/Shell’s global gas and power business in London, Cook doesn’t lack experience at the top. Fortune magazine last October rated her 11th on a list of the 50 most powerful businesswomen in the world. At Royal Dutch/Shell, Cook, 44, had an annual capital budget of $1 billion U.S. and pulled in revenues of $15 billion US from activities in over 40 countries. She was responsible for the company’s global liquefied natural gas business, as well as marketing, trading, pipelines and power generation. ‘‘I think it’s a new area for her to run a company like this, an integrated company,’’ Faithfull said of his successor. ‘‘She’ll do well; she’s a very good communicator, very open,’’ he said. ‘‘I think people will find her a very good person to work with.’’ Faithfull, 58, has been with the Anglo-Dutch multinational for 36 years, serving in several countries prior to becoming Shell Canada’s president and CEO in April 1999. Cook graduated with a degree in petroleum engineering. She joined Shell in Houston in 1980 and held numerous managerial positions in the company’s exploration and production business. She has been married for 21 years and has three children, aged 11, 14 and 16.