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)
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.
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.
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.
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.
Monsanto Canada will never go after farmers who have their fields accidentally contaminated with the companys Roundup Ready Canola, a company spokeswoman says. It is and always has been Monsantos belief that (Percy) Schmeiser knowingly and deliberately misappropriated its Roundup Ready technology, said Trish Jordan, the companys 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 Schmeisers 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 Monsantos request, and University of Manitoba at Schmeisers 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 Monsantos Roundup Ready patented technology. Jordan noted three judges from a federal appeal court later upheld McKays 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 Monsantos history in which court action was pursued against farmers believed to be stealing the companys intellectual property. Jordan said one farmer chose to settle out of court, while Schmeiser didnt want to accept that option. Were 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.
TORONTO (CP) Enbridge Inc., which operates Canadas 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 arent 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 its 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, its 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 were trying to compete with, Daniel said. If Enbridges 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.
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, Canadas 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 households 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, Enbridges 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. Fridays 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 were still seeing relatively flat natural gas.
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 CAEs 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 whats 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. Theyll 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 Bombardiers problems with Amtrak are overshadowed by the airline situation, Kavafian said. Not only is Bombardier being squeezed on the rails, its also got fewer buyers for its airborne products, as carriers retire jets to scale down capacity, rather than purchase new ones. Bombardiers 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 Canadas 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.
REGINA (CP) Bondholders gave the go-ahead to the Saskatchewan Wheat Pools modified restructuring plan Tuesday, securing the immediate future of Canadas second-largest grain-handling company. The development means the Pool Saskatchewans 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. Im 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. Its 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 its 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 its much more optimistic.
CALGARY (CP) Canadas 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 Ontarios Bruce Power complex on the eastern shores of Lake Huron. Chief executive Hal Kvisle insisted the companys nearly one-third ownership in Bruce, which will cost about $376 million, is keeping with TransCanadas 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 its 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 Canadas 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.
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 Larsons 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 Peoples 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 arent better or worse for the environment than other trash thrown in the landfill, but the thousands of bars take up space and get wasted.
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. Weve come through BSE (mad cow disease) in our cattle industry and now a tariff added on, he said. Tie them all together and thats one more impact that we dont 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 its wrong in fact and wrong in law, he said. And well be considering every means by which we can oppose this decision. Goodale would not say exactly how the federal government might respond. Well 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 arms 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.
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 Canadas 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 doesnt 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 Royals share of the proceeds was $195 million US. Royal hasnt 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 Enrons dealings. Rabobank has accused Royal of acting as Enrons 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.
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. Tuesdays 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 werent really surprised by todays move, said Warren Lovely, senior economist with CIBC World Markets. Really, what youre seeing is a currency that hasnt 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 wont 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 wont 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 banks 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.
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 carriers 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 Canadas 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, its 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 Canadas cause, said Moore. With nearly 40,000 workers, Air Canada and its regional unit may be overstaffed, but thats 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.
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 Cooks appointment was announced Friday. Ten to 20 years ago it may have been a big deal, he said. She wont have any trouble, said Frank Atkins, a University of Calgary economics professor who specializes in oil and gas. Her problems will not be that shes female, Atkins added. Her problems will be that shes 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/Shells global gas and power business in London, Cook doesnt 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 companys global liquefied natural gas business, as well as marketing, trading, pipelines and power generation. I think its a new area for her to run a company like this, an integrated company, Faithfull said of his successor. Shell do well; shes 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 Canadas 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 companys exploration and production business. She has been married for 21 years and has three children, aged 11, 14 and 16.
EDMONTON (CP) A Canadian compromise on greenhouse gas reductions is needed to save some oilsands projects, oil company executives told a conference Thursday. There are enough cooks in the kitchen that Im sure well find a solution, said Mike Ashar, Suncor Energys executive vice-president of oilsands. But, Ashar warned, if, at the end of the day, the entire problem is on the back of the oilsands industry, that is not sustainable. Executives from nine companies outlined their oilsands plans before 185 financial experts, academics, engineers and government officials in a one-day conference organized by the Edmonton Society of Financial Analysts. Canadian Natural Resources Ltd. has an $8-billion project before provincial regulators. It would include a mine and upgrader. Engineering studies are continuing without delay, said CNRL vice-president Real Doucet. The big question for us is not whether the project is going to go, he said. The big question is whether (the upgrader) is going to be built in Fort McMurray or the U.S. The United States has said it will not ratify the Kyoto accord, which calls on signatories to reduce greenhouse gas emissions to six per cent below 1990 levels. Petro-Canada oilsands vice-president Brant Sangster suggested that reasonable minds will prevail on Kyoto in time for board of directors approval of an $600-million oilsands project called Meadow Creek, and the conversion of the Strathcona refinery near Edmonton to handle heavy oil. We have not slowed down, Sangster said. But then he added: We will want to get a level of Kyoto certainty before we absolutely commit to it. Meanwhile, Syncrude Canadas seven corporate owners have balked at approving an extra $500 million for the oilsands companys new $5-billion upgrader. What weve done is ask Syncrude to go back and find offsets, Sangster said. On Sept. 13, another owner, Canadian Oil Sands Trust, had revealed the upgrader could cost as much as $5.6 billion. Sangster said everyone would be happy if that estimate could get back down to between $4.7 billion and $5.1 billion.
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 MAXUSs 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, MAXUSs 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.
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 Deers 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 doesnt 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. Its 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 Deers statistics are similar to those recorded in the provinces two largest cities. Calgarys average house prices have climbed 19 per cent to $201,316 from $169,068. Edmontons 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.