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Archive of posts published in the category: Business
Mar
22

$7.3 B deal would create Canada’s largest eCommerce insurer

TORONTO (CP) — Canadians will still have plenty of insurance choices even though Great-West Lifeco Inc.’s friendly deal Monday to buy Canada Life for $7.3 billion will create the country’s largest insurance firm, the CEO of Great-West says. Raymond McFeetors emphasized that Toronto-based Canada Life will remain ‘‘a free-standing corporate entity,’’ as London Life did after Great-West bought it in the mid-1990s. ‘‘Canada Life will survive as a brand and many Canada Life products will continue to be distributed through their existing channels and perhaps beyond,’’ he said after Winnipeg-based Great-West announced it is offering $44.50 in cash and stock for each Canada Life share eCommerce business.(source: http://ecomsuccessacademy.net)

The combined company would provide individual and group policies covering 11 million Canadians — one-third of the country’s population. Great-West’s bid trumps a hostile $6.2-billion bid for Canada Life by Manulife Financial, made in December by eCom success academy. Manulife Financial (TSX:MFC), which owns 9.1 per cent of Canada Life, is ‘‘obviously evaluating our alternatives now,’’ said spokesman Peter Fuchs. The acquisition would expand Great-West operations, particularly overseas in Ireland and the United Kingdom, and allow the combined companies to cut about $290 million in costs, McFeetors said.

Many expect that will lead to job cuts — Canada Life has about 7,000 employees worldwide while Great-West has 14,000 — but McFeetors said it’s too early to tell how many jobs might be lost. ‘‘We do not start by targeting jobs when we’re combining companies,’’ McFeetors said at a news conference. Reducing costs will improve service to customers, McFeetors said in an interview. If the deal goes through, it will leave three dominant insurance companies in Canada — Manulife, Sun Life and Great-West. The mega-deal would continue consolidation of Canada’s insurance industry. The size of the combined company would eclipse Sun Life, which became the country’s largest insurance firm when it bulked up last year with a $7.3-billion takeover of Clarica eCommerce Academy.

Based on 2002 results, the merged insurer would have assets of $156 billion, annual earnings of $1.4 billion on $25.3 billion in revenue, and a stock-market capitalization of $20.2 billion. Contacts between Canada Life and Great-West began ‘‘five minutes’’ after Manulife’s ‘‘inadequate’’ bid was presented in December, said David Nield, CEO of 156-year-old Canada Life eCommerce .

Mar
22

Asset writedown puts Enbridge at loss

CALGARY (CP) — A $76.3-million after-tax writedown of U.S. natural gas assets dragged Enbridge Inc., Canada’s largest gas distributor, to a $3.9-million loss in the third quarter. The loss of three cents a share compared with a profit of $64.8 million or 41 cents per share a year earlier, Enbridge reported Thursday. Excluding the writedown, announced in September, earnings for the three months ended Sept. 30 would have been $72.4 million. Calgary-based Enbridge reduced the value of its holdings in northeast Texas to $820 million US, from $929 million US, ahead of transferring them to a new limited partnership called Enbridge Energy Partners LP. ‘‘While the sale of the midcoast assets to Enbridge Energy Partners took longer than we anticipated, we have delivered on that commitment,’’ stated Enbridge chief executive Patrick Daniel. ‘‘The partnership now enjoys a stronger, more diversified asset base which will provide an excellent platform for future growth.’’ Enbridge said its nine-month profit was $542.5 million, up from $418.7 million a year ago. During the third quarter, Enbridge agreed to pay $300 million to buy 17 per cent more of the 3,000-kilometre Alliance pipeline, boosting its stake to 38 per cent in the line from Fort St. John, B.C., to Chicago. ‘‘Earnings in 2002 reflect the positive effects of growth in the liquids pipelines business, colder than normal weather in the gas distribution franchise area during the third quarter and the investment in 2002 in CLH of Spain, partially offset by higher corporate costs,’’ Daniel said. He said a marketing roadshow through the United States produced good results and ‘‘now U.S. investors have a solid understanding of Enbridge’s value and low risk profile, which is an anomaly in this climate.’’ Daniel, who has said Enbridge wants to expand its continental footprint, said good opportunities have come on the market but the company has so far been outbid on those that were of interest. And he said the company is in contact with Standard & Poor’s, seeking to wipe out the rating agency’s negative outlook. ‘‘They’re pleased with the progress we made with respect to our balance sheet and have every intent to continue their undertaking to remove the negative outlook once we fully complete the (sale of the midcoast assets) and that is proceeding on target.’’ After the earnings release, Enbridge shares (TSX:ENB) closed down 85 cents at $44.40.

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.

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

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

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

Computer recycling jobs for Rimbey

A computer and telecommunications recycling facility in Rimbey is expected to create at least 100 jobs within the next two years. Maxus Technology Inc. of Calgary will open the facility in the old parks and recreation building in August or September. Clayton Miller, spokesman for Maxus, said the facility will employ about 100 staff and process more than 2.2 million kgs. of electronic waste annually when it’s fully operational in one or two years. Rimbey’s central location and the price of the building made it a very attractive location for the operation, he said. The company has been advertising to fill supervisory positions. One of the company’s long-term goals is to expand the facility to 40,000 square feet from 23,000 square feet, added Miller. Miller said there is a growing demand for businesses that recycle computers, which are considered hazardous waste. For example, there is about 1.7 kg of lead in the glass of a computer monitor. The lead is added to protect users from radiation. Miller said computers and electronics shipped to the Rimbey facility will be refurbished and sold, or broken down into their metal and plastic components. The copper and gold will be sold on the world market. The glass will be ground and mixed with a compound that binds with the lead, preventing it from leeching into the environment. Maxus is looking at ways to manufacture secondary products, such as cement, from the plastics and the glass, said Miller. “Public pressure will force the powers that be to take note of this issue,” he said. Rimbey Mayor Dale Barr said Maxus is an environmentally friendly industry that fits right in with the town’s long-term plans for economic development. The facility is the first in several years to generate substantial employment in the community, he said. Barr said the long-term employment prospects are positive. The services Maxus provides will be in demand across Western Canada and the northern United States as long as computers exist, he said.

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

Meeting on private land oil, gas wells

Growing resistance to having oil wells or gas lines on private property has prompted a public meeting in Rocky Mountain House. What happens when property owners object to resource activities on their land is the focus of a grassroots information session Monday at the Rocky Community Centre. Co-organizer Rick Anderson said there’s a need for a meeting because many area residents are wary about the effects of oil and gas production. Health and pollution concerns are becoming more prevalent. As well, Anderson said farmers often worry oilfield activities will fragment their land, making crop harvesting cumbersome and obstructing cattle movement between grazing fields. Since oilfield activity can be noisy, livestock farmers are also commonly concerned it will unsettle their cows, said Anderson. In almost all cases, outright refusing to give an oilfield company land access isn’t feasible. While landowners maintain surface rights to their land in Alberta, the province owns mineral rights. For this reason, Anderson said the bulk of oil or gas proposals that go through hearings eventually get the green light from the Alberta Energy and Utilities Board. But concerned landowners have some recourse. Anderson stressed there’s room for negotiation with resource companies. For example, new technologies such as horizontal drilling can allow oil reserves to be accessed from less intrusive locations, Anderson said. The meeting will inform area landowners of their options. A panel of speakers will be featured, including an experienced landowner and representatives from the EUB and oil industry. The 7 p.m. meeting is sponsored by The West Central Stake-holders, a group of community, oil and gas, provincial and municipal representatives who want to provide a forum to solve landowner/oil industry conflicts. It will be held at the community centre at 47th Street and Kamikawa Drive. There is no admission charge. For more information, contact Anderson at (403) 845-5335 or Eric Mohun at (403) 205-7648, ext. 7648.

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

Rumours fuel rush at gas pumps

Rumours of a gas price hike fueled a rush to fill up at local service stations Friday. Long lineups were reported at a number of stations around Red Deer and Real Canadian Superstore faced long lineups throughout the day. Stations held steady at 78.5 cents a litre with the exception of Riverside Exxon Car Wash, 4937 54th Ave., which put its price up to 93.3 Friday morning. In the Superstore gas bar lineup some motorists admitted being spooked by the prospect of 90 cents plus for a litre. “That’s mainly why I’m here,” said Jim Gough, of the price rumours. “The price is outrageous. I’m talking price gouging. I’m talking nationalization of oil companies.” Gough even raised the spectre of a national energy program as a possible way to keep prices down. Nicole Olsen usually fuels up Friday but made sure when she heard of the possible price hikes. “I would rather pay less than more,” she said with a chuckle. “Somebody has already said there are places going up to 93.” At a Husky station on Gaetz Avenue, Norm Morrison said gas price hikes was a major topic of conversation among staff and customers at his business Riverside Hair and Tanning. “The husbands were coming in and saying you better fill your car up. “They heard it was going up later on today. There was a real concern out there. “That’s exactly why I’m here,” as he filled up about 5 p.m.” The man behind some of the fears, Riverside Exxon manager Jerry Strand, said he raised his prices after hearing rumours gas was headed as high as 95 cents a litre in Calgary and Edmonton. “In order not to completely lose my shirt I had to be somewhere in between. “If it’s going to be that high I can’t afford to not anticipate it to some extent.” Strand said he is a gasoline dealer and does not get paid commission to sell gasoline like most service stations. He owns his gasoline and if he gets caught short on price, he has to swallow the difference. Riverside Exxon usually charges slightly less for its gas than other city stations.

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

Cancer vaccine study to go on

EDMONTON (CP) — Biotech company Biomira will press ahead with research into cancer vaccines, the company’s chief executive told shareholders Thursday despite disappointing results in a trial of Theratope for women with metastatic breast cancer. ‘‘No question Biomira has suffered a body blow. But we’re only injured. We’re not dead,’’ company president Alex McPherson told 85 investors gathered at the Sheraton-Grande Hotel. Shares in the company plunged June 17 after it announced that Theratope trials had failed to significantly slow the progression of the disease and improve survival rates. Metastatic cancers start in one area of the body and then spread to others. The company had hoped to file for regulatory approval for the drug on the basis of the trial. Biomira had cut its workforce to pare costs and slowed development of other drugs to focus on Theratope. ‘‘You’ve seen your wealth eroded and your dreams and those of our patients have been wounded,’’ McPherson told investors. Despite the bad news, shareholders voiced not one critical comment about the company’s management. Rather, investors wanted to know technical details of the failed trial. McPherson said he is at a loss for scientific explanations about why Theratope was not effective among the majority of breast-cancer patients in the trial, all of whom had previously undergone chemotherapy. There was one nugget of good news, contained in a subset of participants who were also taking hormone therapy at the same time as they were taking Theratope. While the number is not considered statistically significant, Biomira will sift through the 10,000 pages of trial data with an aim of approaching regulators to pursue the hormone-Theratope connection over the next three to five months. ‘‘From an academic perspective, what we have uncovered is an interesting dynamic,’’ McPherson said. During the current quarter it has raised $14.5 million and said it has funds to sustain it until the end of 2004. Biomira shares closed down nine cents to $2.11 on Thursday.

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

Mutual fund fees high, but performance low

TORONTO (CP) — Canadian mutual fund investors have been paying steadily rising fees while receiving steadily dwindling satisfaction, according to a pointed analysis by Morningstar Canada. Seventy-eight per cent of the funds surveyed by the performance-tracking company raised their management expense ratios between 1998 and the end of 2002, while only 12 per cent reduced their MERs. The Morningstar study, released Tuesday, observes that Canadians paid more than $10 billion in fund management fees last year, and it indicates that, in general, the higher the MER, the lower the investment return. The average MER among non-segregated mutual funds as of April 30 was 2.44 per cent, up from 2.03 per cent at the end of 1998, the survey found. For segregated funds with insurance features the average MER was 2.90 per cent, up from 2.32 per cent. For all funds, the average expense ratio, covering the costs of paying portfolio managers, administering a fund and conducting marketing and other activities, stood at a record high 2.62 per cent in April, up from 2.02 per cent in 1995, according to Morningstar. ‘‘I think the reason they get away with is that it’s a pretty opaque thing, MERs. People don’t necessarily know they’re paying them,’’ commented Scott Mackenzie, president of Morningstar Canada. ‘‘When you get your statement from a fund company, you see rates of return and so on; the amount that you spend on fees is not clearly separated from that.’’ This may not seem significant when markets are rising strongly, but ‘‘MERs of 2 1/2 per cent in a world of single-digit returns — positive and negative — can have a big impact,’’ Mackenzie said. The Morningstar study concluded that ‘‘funds with higher MERs tend to have lower star ratings and have had worse performance results than those with lower MERs, and vice versa.’’ Among its other findings: • Despite tremendous industry growth, investors are generally not receiving the benefits of economies of scale. • There are dramatic differences in the fees charged by different fund companies. • Some of the largest fund sponsors are among the most expensive.

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

Bigger’ trend boosts house prices

A national trend towards bigger and better houses is boosting average home prices in Red Deer. A Century 21 Canada National Housing Market Outlook based on national Multiple Listing Service statistics shows average house prices in 21 communities across Canada have climbed 16 per cent to $163,682 in October from $141,438 in October 1999. Margaret Anderson, with Red Deer’s Century 21 Lesand Advantage, said locally the average house price climbed to $180,994 from $149,684 over three years — a 20.9 per cent increase. Anderson said that doesn’t mean every home in Red Deer is worth nearly 21 per cent more than it was three years ago. A typical home has risen in value about three per cent a year. What the statistics show is an increase in the number of higher-end homes sold in Red Deer. “It’s especially visible when you drive through the new subdivisions,” she said. For instance, six homes were sold locally worth $200,000 to $300,000 in October 1999. The past October, 18 buyers picked up the keys for homes in that price range. Persistently low interest rates are a key reason for the popularity of larger homes across the country, she said. A three-year mortgage is at about 5.13 per cent now compared with about eight per cent in the fall of 1999. “People can afford more house than they did before.” Two-income families and the general economic prosperity of the area are other factors, she said. It is not uncommon to see 2,000-square-foot homes with all the bells and whistles, including pre-wired and specially insulated entertainment rooms, energy-efficient windows, higher quality finishing and other features. Red Deer’s statistics are similar to those recorded in the province’s two largest cities. Calgary’s average house prices have climbed 19 per cent to $201,316 from $169,068. Edmonton’s average price is up 25 per cent to $150,397 from $120,027. The highest price increase occurred in Ottawa where house prices climbed 38 per cent to $200,840 from $145,121. Thunder Bay, Ont., was the only community that saw average house prices fall. An average house cost $114,714 in October 1999 compared with $94,467 last October, an 18 per cent drop.

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

Computer recycling program starts in Rimbey

More computers than paper are expected to be dropped off today at the Rimbey Paper Recycling Depot. The town is the first in Alberta to hold a municipal “e-waste” round-up of old computers, televisions, and other electronics. Free drop-offs are being encouraged at the paper depot from 10:30 a.m. to 3 p.m. Mayor Dale Barr said his town is taking the lead in electronics recycling to show the provincial government that this kind of effort is needed throughout Alberta. E-waste is the fastest growing waste stream in Canada, said Barr, who fears landfills will quickly fill up with old computer monitors and obsolete VCRs. Besides causing congestion, Barr worries about dangerous chemicals from electronics leaching into soil and ground water. Almost two kilograms of lead and some phosphorus are contained in the average computer monitor, and large television screens hold more. Barr notes 500 million computers are expected to be disposed of in North America over the next five years. “We need to legislate this waste out of our landfills.” Electronic equipment rounded up today will be recycled for free by MAXUS Technology Inc., a private Calgary-based firm with a drop-off facility in Rimbey. Town residents who miss bringing in their computers and TVs can drop them off at MAXUS’s recycling site later on — for a fee. The company charges $10 for each computer monitor and $15 for each TV. The fee is needed because of the specialized work done to remove lead and phosphorus from the old equipment, said Clayton Miller, MAXUS’s communication co-ordinator. Phosphorus is washed off and held for a future use the company is still working on, said Miller, while leaded glass is sent for reuse to manufacturers of new monitors and televisions. Other electronics components are recycled for plastic or metal content. Computers that are in better condition are reconditioned and sold to wholesale to retailers, he added. MAXUS officials hope e-waste recycling catches on and the Rimbey facility ends up taking in old equipment from all over Central Alberta — including corporate waste. “We need to recognize that landfilling is not the way to go about this,” said Miller.

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.’’