Sunday, July 23, 2017
Friday, July 21, 2017
Where Are the Synergies? Hydro One Deal
As stated in earlier post (along the lines of this transaction will be a fail due to the forces of reality or a government backed and guaranteed success), the dividend is either going to be rock solid and Ontarians on the hook for paying higher prices to keep it this way, or a complete meltdown as the market wakes up to how this anomaly actually works.
Thursday, July 20, 2017
Hydro One on the Acquisition Trail? "The Kathleen" and Her Merry Band of Taxing Liberals Must be Breathing Easier
The trend is there for Canadian public companies acquitting other utilities in the US; however, although Hydro One is public, it is not your average publicly listed company on the Toronto Stock Exchange. It is majority owned by the Ontario government with Ontarians screaming either for "those are the Assets of the people of Ontario!" or "great, it's public now pay me a dividend!".
Either way the culture of bloated pensions and benefits, a cozy club of "sunshine list" earners (greater" than $100,000/year) and from many reports, rarely a full 8hr work day worked, continues throughout.
The fact an acquisition was made gives the Ontario Liberals another angle of shirking any responsibility as now the government's position will have been diluted and they will argue out of both sides of their mouths to Ontario voters that they have a vastly reduced say or influence as a significant shareholder going forward, so throwing their hands up in the air...yet claiming they did the right thing originally in floating Hydro One as a public entity (thereby pleasing leftist union supporters and reality based capitalists).
As reported, no layoffs are expected at Avista Corp. which for any acquisition is rare, further exemplifying the Ontario Liberals' tentacles and "hire everyone, fire no one" approach are still lingering. Also, at first pass, it seems there is little in the way of any synergies as the operating territories do not overlap. Conclusion, Investment Banking 101 would seem this announcement is a head scratcher.
If closed, going forward one of two things are going to happen: the new US subsidiary will either morph into the old Ontario Hydro culture that still permeates the public company today, or Hydro One will actually have to start behaving like a real business and have a more stringent view on compensation and take a hard and close review of the long term pension obligations.
We will see which result wins. I suspect the real winner is the firm raising the US$1.1B in equity and the US$2.6B in debt will be the horse to back.
Another Canadian Utility Nabs U.S. Assets in a $3.4 Billion Deal
https://www.bloomberg.com/news/articles/2017-07-19/hydro-one-reaches-5-3-billion-deal-to-buy-u-s-utility-avista
Tuesday, July 18, 2017
CFL 2017: Typical Start, The West is Best and the East is .500
In the East, the Argoooooooooooos are on top with a .500 record, and last year's Grey Cup winning REDBlacks are nowhere to be seen. They must have been celebrating right through training camp....
Too Much, Too Late for "‘Massive effort’ underway to create database that will shed light on Canada’s housing market": It is Known Where the Additional Housing Demand Has Come From and only a 15% Tax Was Placed on it
Finally this is being done; however, it is too late. The cat is out of the bag. Despite data being released that only one in 10 or one in 20 buyers are "foreign", this does not account for many housing transactions purchased by a Canadian funded by a "foreigner", nevermind Permanent Residents (PRs), Visa entries and other classifications involved in these transactions. In Vancouver, the headlines and real estate chatter is full of these examples.
Essentially, Toronto (and other major cities in Canada) are bidding against the world, not just the couple of million residents in their own city borders. Why? There are no restrictions on "foreign" buyers (this has not been defined by any media source or real estate body - is it a non Canadian? a non Canadian passport holder? a non permanent resident?), unlike other countries such as Australia (only new construction is available by foreign purchasers). Foreign purchasers, whether becoming PRs or Canadian Citizens or no interest in any status, want the security of law and title as well as having an eye on education (which is significantly cheaper compared to world standards, and Canada does not appreciate it).
If Justin and his merry band of Liberal taxation experts want to close loop holes, protect the middle class and raise more tax dollars, then instead of a provincial 15% foreign buyer tax:
i) Increase property taxes that would benefit directly those who have been able to enter this housing frenzy and reduce directly their follow on expenses like annual property taxes or improve the infrastucture for which property taxes are raised and used. This would be a more accountable and direct method for a housing tax rather than going to the provincial (Kathleen's) coffers.
ii) Increase tuition fees for those not in any citizenship application process. Canada's universities and colleges are world class and this standard of education is coveted around the world - especially at the price Canadians (and foreign students) pay! So much so, that as witnessed from many resumes I have read at my prior firm, many are only applying and graduating under one final semester of the program (while credits from a previous international university are transferred). This "appears" as a graduation with a (as an example) full UBC degree (far from the full represntation). The US is charging astronomical amounts for education to its own American Citizens (nevermind foreign students). In Canada, this education is a bargain (just don't tell the red path kids in Montreal, they may protest again).
http://business.financialpost.com/personal-finance/mortgages-real-estate/massive-effort-underway-to-create-database-that-will-shed-light-on-canadas-housing-market/wcm/7b6aff4d-0bff-4223-a2cc-bc0207ff9e89
Sports and Finance: Reiterating Professional Sports as a Business....and Canada's Unfriendly Tax Breaks for Business
Easy to abuse, and many do it, but the spirit of expensing such items is much harsher here in the Great White North.
http://business.financialpost.com/personal-finance/the-bruins-couldnt-beat-the-sens-but-heres-how-they-scored-on-the-irs/wcm/db345006-a5d1-4d26-816a-66e4bf6072e4
Wednesday, July 12, 2017
Finally an App for Long Term, Financial Sense: Preparing for Retirement Years, Could be Impacted by your Coffee Purchases
Some people I know or have worked with voyage down into those food courts or must enter a higher end, corner coffee shop a few times a day. Not only are they spending say $8 to $12 on coffee every day (let's say, weekdays), this is in addition to the $20 to $25 in parking per day (convenience of your own car versus public transportation or walking or cycling), and the $15 to $20 in lunch and Timbits (again, let's assume on a weekday).
Adding these items up could range from $43 to $57 per day or, excluding weekends, $215 to $285 per week!
I don't own a car, but unable to escape car and car financing commercials, these expenditures would be able to finance one from what I've seen. In other words, if you already have car payments, then behaving like this would be the equivalent of paying for two cars in terms of the money in your wallet at the end of the day.
Nevermind all those minutes in a coffee line at 930am and 2pm each day!
http://business.financialpost.com/personal-finance/retirement/your-money-will-a-countdown-clock-to-retirement-help-you-save/wcm/7eaf82b7-32fb-4c1b-a71c-994979857e39