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Results: 1 - 15 of 75
View Brian Masse Profile
NDP (ON)
View Brian Masse Profile
2013-05-23 17:02
Thank you.
This is quickly to Mr. Rowlinson. Sudbury has been affected by massive amounts of foreign takeovers over the last number of years. How is it related to employment in Sudbury? Have they actually increased employment with the loss of Canadian mining companies now to the foreign takeovers?
Mark Rowlinson
View Mark Rowlinson Profile
Mark Rowlinson
2013-05-23 17:03
Employment levels at Vale facilities in Sudbury have been dropping steadily since they purchased the operation, both before and after the year-long strike that was provoked by the company. I don't have the exact employment levels, but roughly a thousand or so people have lost their jobs, and the community has certainly not benefited from the foreign investment from Vale.
View Dan Harris Profile
NDP (ON)
Thank you very much.
Mr. Stanford, you mentioned the takeover of Electro-Motive Diesel by Caterpillar. Caterpillar has also recently shut down a tunnel-boring manufacturer in Toronto, Lovat, one of the world leaders. That's really a move to take away the intellectual property that exists and to move the production elsewhere.
I want to go back to MacDonald Dettwiler, the one instance where a sale was blocked. We have a problem in Canada where anytime a company is getting to a sufficient size, oftentimes that's when it gets taken over. The sale of MDA was blocked. A few years later, MDA actually went and bought a U.S. company, Space Systems/Loral.
Perhaps you could comment about the positive impact for Canadian businesses when they remain Canadian and are given the chance to actually grow and succeed.
Jim Stanford
View Jim Stanford Profile
Jim Stanford
2013-05-23 17:06
I agree, sir, that we have a structural problem in our ability to nurture companies beyond the start-up phase through to the medium and larger size of firm, which is so important in order to reach export markets, invest in innovation, and so on. I think the ease of foreign takeovers—especially of the smaller firm, which now under these regulations is under a billion dollars, and that is quite a significant firm—is one of the factors in why Canada has a dearth of globally oriented, successful, medium-sized exporters.
View Geoff Regan Profile
Lib. (NS)
The government has been criticized for failing to appreciate the potential chilling effect of significantly changing our foreign investment rules several times in the past year as it was making controversial decisions.
The government has actually denied that there has been a decline in merger and acquisition activity, although we saw that in the first quarter of this year, as we saw reported this week in the Globe and Mail. or they're saying that it's due to global economic conditions.
Would you care to comment, Mr. Facey or Mr. Krane?
Brian Facey
View Brian Facey Profile
Brian Facey
2013-05-23 17:17
Yes, I think there has been a bit of a slowdown in terms of the M and A activity. I don't think it's a result of changes in our foreign investment law that have come out, or our perspective, or the decisions that were made in December. I think it's probably reflective more of the global economic climate.
I would say this. I think the fundamental thing about the changes before you is that, number one, there is more uncertainty. We said that in our letter. There is a question: am I a state-owned enterprise? That kind of uncertainty does provide a bit of a chill. We get asked a lot of questions, such as, “Can we do this investment, or are we going to be mired down in six months of unpleasant publicity and problems?”
We're comfortable giving advice on it, but clients would like to know with some certainty whether the government agrees with that advice. That's why what we've said is that to the extent there's more uncertainty, it would be helpful to have some sort of process, some sort of protocol, to have an advance ruling on that, which I think is the same thing my colleague Ailish has mentioned as well.
View Hélène LeBlanc Profile
NDP (QC)
I would like to touch on the differences between asset value and enterprise value. Also, what are the consequences of the number of transactions? I think I've seen there would be fewer transactions because the enterprise value would be a little higher than the asset value.
Paul Halucha
View Paul Halucha Profile
Paul Halucha
2013-05-21 16:01
Matt is looking up the technical definition at this point.
But it's to get a better market approximation of the value of the company versus a book value. So, for example, company assets like intellectual property would not necessarily be captured in the asset value but would be much more likely to be factored into the market price of the company.
Paul Halucha
View Paul Halucha Profile
Paul Halucha
2013-05-21 16:02
In terms of the actual mechanics, the proposal is to go back about two months and look at a period of 20 days prior to the bid because you don't want to have a case whereby the bid results in an increase. Market prices jump because of a bid in an acquisition, as often happens, so you go back to a period before the bid. It's a 20-day period prescribed in the regulations. We take an average of that period. We add liabilities because those are costs that the investor would be taking on and that gives us the market value.
Matthew Dooley
View Matthew Dooley Profile
Matthew Dooley
2013-05-21 16:02
Certainly. The calculation for publicly traded companies, as Mr. Halucha just said, is the market capitalization based on our going back two months and over 20 days, plus assumed liabilities. It's a cost that the investor will incur less any cash on hand because it's money the investor is receiving.
For privately held companies, it will be the price to be paid according to the terms of the agreement that the parties enter into plus assumed liabilities less cash on hand.
View Dan Harris Profile
NDP (ON)
So any large mining takeovers that involve similarly sized companies that did not specifically operate in the oil sands would not be subject to that kind of a restriction. Is that correct?
Paul Halucha
View Paul Halucha Profile
Paul Halucha
2013-05-21 16:29
I wouldn't characterize it as another restriction, but you're correct that the exceptional language of the policy statement in the fall would not apply to a mining company.
View Dan Harris Profile
NDP (ON)
Okay.
In 2009, again, when the previous deals were rejected on potash and on MacDonald, Dettwiler, there was another term that was added, again I say into the lingo, which was “strategic assets” and “strategic industries”. To your knowledge, has that been clearly defined in the act or by the government, or by Industry Canada yet?
Paul Halucha
View Paul Halucha Profile
Paul Halucha
2013-05-21 16:30
To the contrary, not only is it not defined, it's not an operable concept in the act at all. I always thought that the concept of strategic industries or strategic resources was used more in public commentary to ascribe an importance to an economic asset, and I think it makes sense there because it's easy to communicate. But in the context of the act, it doesn't have any grounding in any one of the six factors, so it's not an operable concept in the regime.
View Mike Lake Profile
CPC (AB)
On a point of order, Mr. Chair. I'm not clear on what he's asking.
Is he suggesting that every single time someone uses a new piece of terminology we should change the act? Is it that any time some commentator introduces a new term, the act should be changed? It sounds like that is what he's suggesting.
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