Hong Kong billionaire Li Ka-shing, Asia's richest man, is targeting further growth in Canada's energy sector as a company he controls has snapped up Calgary-based TransAlta Power LP for $629-million and could buy more of the country's beleaguered income trusts. TransAlta Power, one of Canada's larger power trusts, had put itself up for sale in May, claiming that the federal government's decision to tax income trusts like regular companies meant its business model was no longer the best way to serve unitholders. It is majority owned by Calgary-based private power producer TransAlta Corp.
People familiar with the deal said Mr. Li, who already controls approximately 71 per cent of Calgary-based Husky Energy Inc., is using his cash-rich position to take advantage of current uncertainty in the trust sector, with the TransAlta acquisition allowing CKI to become a meaningful Canadian electricity player without yet having to become an operator.
CKI has some $1.1-billion of cash still to spend. Potential acquisition targets in Canada could include power generation trust subsidies owned by other infrastructure companies, such as Enbridge Inc., which will likely be sold or restructured as traditional common stock companies by 2011.
Mr. Li's increasing interest follows recent acquisitions in Canada's energy sector by another unlikely overseas player, Abu Dhabi National Energy Co., known as Taqa, which has targeted $7.5-billion on acquisitions in Alberta in just six months.
TansAlta Power pushed for deregulation and played the Income Trust game. It also has the right to sell power south of the border in a blended mix with American electrical utilities. One of the only Canadian utilities to have such an arrangement. Thus it's generation of electricity is for sale to the highest bidder.
Jim Dinning the man who would be Ralph was on the board of TransAlta. While 'private' it was created under the Social Credit government and its board has always been open to the parking of former government cabinet ministers.
Today the Transalta board is a whose who of Canadian and American business interests. It and Enbridge both have influential former U.S. ambassadors to Canada on their boards.
Enbridge is another private energy company that was also a Trust when Flaherty announced his Halloween Surprise last year.
Interprovincial Pipe Line (IPL), which became Enbridge Pipelines in 1998, was incorporated in 1949, shortly after Canada's first major oil discovery at Leduc, Alberta. The original pipeline was constructed to transport oil from Western Canada to refineries in the east.Ah yes Colombia, home of death squads for trade unionists, and now has been given Harpers favorite nation trading status.
Although Interprovincial had long been publicly traded, for most of its life the company was primarily owned by a handful of producers who shipped their products on the system. Then in 1983, Hiram Walker Resources took a major position in Interprovincial, through a share swap. That led to a string of events that included the acquisition of Home Oil in 1986, the creation of Interhome Energy, and control by Olympia & York. In 1992, Olympia & York sold its majority interest into the general marketplace, and Interprovincial became a widely held company. That was really the beginning of the Enbridge of today.
But Enbridge now is also owner and operator of Canada's largest natural gas distribution system, and is building a new gas distribution system for the province of New Brunswick. Enbridge participates in gas transmission through the Alliance and Vector gas pipelines. It is involved in the gas midstream business, liquids feeder pipelines, electrical power distribution, retail energy services, energy marketing, fuel cells, and has a growing involvement internationally with investments such as the OCENSA crude oil pipeline in Colombia.
Some in Congress have expressed concern over violence in Colombia, particularly attacks on trade unionists. President Uribe takes these concerns seriously, and he has responded decisively. He's established an independent prosecutors unit to investigate and punish homicides against labor unionists. He's allowed the International Labor Organization to station a permanent representative in Bogota. He's worked to offer young Colombians better alternatives to a life of violence and drugs -- including the new jobs and economic opportunities that would come from a trade agreement with the United States.
Colombia's record is not perfect, but the country is clearly headed in the right direction -- and is asking for our help. Both houses of the Colombian legislature have expressed overwhelming support for the trade agreement with the United States. And now they're waiting to see if we will uphold our end of the deal. If Congress were to reject this committed ally, we would damage America's credibility in the region, and make other countries less willing to cooperate in the future. As Prime Minister Stephen Harper of Canada put it, "If the United States turns its back on its friends in Colombia, this will set back our cause far more than any Latin American dictator could hope to achieve." By its bold actions, Colombia has proved itself worthy of America's support -- and I urge Congress to pass this vital agreement as soon as possible
Like TransAlta, Enbridge's board has former members of the Alberta Government, including the former CEO of Telus, as well as those with connections to the U.S. Government and with Dubai and other middle eastern investors looking to expand into the energy and utility markets in Canada.
There’s a new way of pegging an energy company a takeover target: TAQA-over.Like many of Alberta's energy companies there are overlaps between the board members.
As everybody knows, or will, once it finishes spending billions in the Canadian oil patch, TAQA is an acronym for Abu Dhabi National Energy Co., which is buying PrimeWest Energy Trust for $5-billion, and still has some $13-billion left to spend.
RBC analyst Fai Lee is calling Enbridge Income Fund a TAQA-over candidate. Without actually connecting the dots between the Abu Dhabi outfit and Enbridge, he calls the fund a potential takeover candidate for a private or strategic investor, given its attractive asset portfolio.
J. LORNE BRAITHWAITE
(Age 65) Malahide, County Dublin, Ireland
Mr. Braithwaite joined the Board in 1989 and is a member of the Corporate Social Responsibility Committee and the Human Resources & Compensation Committee.
Mr. Braithwaite was President and Chief Executive Officer of Cambridge Shopping Centres Limited (developer and manager of retail shopping malls in Canada) from 1978 to 2001. As of January 2006, Mr.Braithwaite joined the largest shopping mall company in the Middle East, as the Chairman of MAF Shopping Centres, LLC, Dubai, United Arab Emirates. He is a Director of Enbridge Gas Distribution Inc. (public utilities company that is an indirect, wholly-owned subsidiary of the Corporation), Jannock Properties Limited (public real estate company), Bata Shoe Corporation (private international shoe retailing company) and Canada Post Pension Plan Investment Advisory Committee. Mr. Braithwaite is also a Trustee of Enbridge Commercial Trust (trust and a subsidiary of Enbridge Income Fund which is managed by a subsidiary of the Corporation).
Mr. Braithwaite owns 33,751 Enbridge Shares and 7,637 Deferred Stock Units.
Enbridge CEO Patrick Daniel also sits as the director on Encana, Conservative bag man Gwyn Morgans old company, which was another energy company that was about to become a trust when Flaherty made his ill fated announcement, and sits on Enerflex an oil field services and supply company.
Just as there are overlaps between Enbridge Trust board members and Telus.
The hollowing out of Canadian business is not a aberration, it is not accidental, it is the result of Canada's energy businesses situated in Alberta being open for business. The boards are made up of movers and shakers from the U.S. and Canada energy businesses, who are willing to sell off portions of their companies to foreign investors, by using the Income Trusts, which are unregulated.
Like energy deregulation, it was never about creating value for Albertans or Canadians but about creating value for foreign and American investors at our expense.
And since these guys are the movers and shakers in Alberta's energy sector they are also the same guys crying the blues about royalty increases. Not because it would hurt their bottom line but that it might not make their companies so attractive to foreign investment buy outs. But of course that too is a lot of Chicken Little nonsense as this recent buy out of TransAlta shows.
Alberta and Canada are open for business, come buy us out.
With globalization, however, hollowing out has become a political issue for most industrialized nations. The difference this time is that no single nation is the principal acquisitor, nor is any one country the sitting duck. The hunter and the hunted have become interchangeable. Companies in China, Brazil, Saudi Arabia, Sweden and Switzerland are on the prowl. And the prey may be in Germany, Italy, Britain, Australia, the U.S. and, yes, even Canada.
In the first eight months of this year, foreigners gobbled up Canadian companies worth an astounding $90 billion. Canadian companies such as Inco, Dofasco and Alcan that formed part of the industrial backbone of the Canadian economy are Canadian no more.
This "hollowing out" of corporate Canada worries many Canadians, including top business leaders. For example, Caldwell Securities, a major investment firm, has run full-page newspaper ads on "The Sellout of Corporate Canada." It called the loss of head offices and industrial leadership "one of the great corporate tragedies of our time."
Despite these warnings, Prime Minister Stephen Harper has left no doubt that he considers the sellout to be of little importance.After months of rising pressure to do something about the supposed threat that foreigners will buy up too many Canadian companies, the federal government this week responded in almost exactly the right way: with a policy of tough-talking inaction.
Canada is not drifting towards protectionism despite a government promise to look into the country's foreign investment rules, according to Jim Flaherty, finance minister.
"We cannot turn our backs on what's happening in global trade nor would we want to," Mr Flaherty told the Financial Times. "You are not going to see a protectionist Canada."
Four out of five of Canada's leading CEOs think Ottawa should impose new restrictions on takeovers by foreign state-owned firms and seven out of 10 favour reviewing acquisitions by outsiders for national security concerns.
These survey results of Canadian Council of Chief Executives (CCCE) members are being released today as part of an effort by the 150-CEO group to address public fears about a "hollowing out" of Corporate Canada's head offices.
"The world is awash in capital despite the current credit squeeze and some of the biggest players wandering around snapping up companies have very deep pockets and happen to be state-owned players," said Thomas d'Aquino, president of the CCCE.
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