Rogers hits back at ex-CEO Natale, saying he breached contract

Layan Odeh, Bloomberg News

Rogers Communications Inc. denied that it owes money to its former chief executive officer and accused him of breaking his contract. 

Joe Natale breached his fiduciary duty to the telecommunications firm and “improperly received” more than $15 million (US$11 million) after negotiating a richer severance package that he wasn’t entitled to, the company said in a court filing.  

In a lawsuit last month, Natale alleged that the Toronto-based company, which dismissed him as CEO in 2021, still owes him more than $24 million.

Natale, on learning that September that he was about to be ousted, “sought support to significantly enhance his own employment arrangements” and force out Chief Financial Officer Tony Staffieri, who was in line to replace him, Rogers said in a statement of defense and countersuit. 

Natale also sweetened the pay agreements of three senior Rogers executives without authority and hid the decision from key board members, the company alleges. Those three executives later renounced any entitlements under the revised deals, the filing said. 

Bill Walker, an outside spokesperson representing Natale, said by email: “Mr. Natale denies all of the allegations in RCI’s counterclaim, which is completely without merit. He is confident that the courts will see this tactic for what it is: a transparent attempt to avoid contractual liability and to further disparage Mr. Natale’s excellent reputation.”

The legal spat stems from a dispute that erupted among members of the Rogers clan, which controls Canada’s largest wireless and cable provider. It exposed fissures within one of the country’s wealthiest families, which also owns television and radio stations, Canada’s only Major League Baseball team and a major stake in Toronto’s pro hockey and basketball clubs. 

Natale was in charge when Rogers made a $20 billion offer to acquire rival Shaw Communications Inc. in March 2021, but months later Chairman Edward Rogers soured on the CEO and made a play to get rid of him. Edward’s mother, Loretta Rogers, and two of his sisters, Melinda Rogers-Hixon and Martha Rogers, fought back on Natale’s behalf, in alliance with several other board members. 

Edward Rogers sued to establish control over the board, drop five independent directors and replace them with his allies. 

As part of Tuesday’s legal filing, the company alleges that Natale stalled a request by Edward Rogers for a copy of the shareholder list, which he wanted in preparation for his legal battle to replace board members. “There was no justification for the 16-day delay, other than Natale’s desire to unlawfully enhance his compensation before allowing their release,” the company claims.

Edward Rogers prevailed in court in November 2021 and Natale was gone less than two weeks later, replaced by Staffieri.

Rogers selling $3 billion in bonds to refinance debt

Esteban Duarte, Bloomberg News

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Rogers Communications Inc. priced the largest corporate bond issuance so far this year as the telecom company refinances debt after it completed the acquisition of a smaller rival.

The Toronto-based wireless company sold $3 billion (US$2.2 billion) of investment-grade rated notes in four parts, according to data compiled by Bloomberg. The longest portion of the offering, a 10-year tranche, was priced at the tight end of a range between 232 basis points and 235 basis points over the Canadian government curve, said the person, who asked not to be identified as the details are private.

Rogers agreed to a $6 billion bank facility to help fund its $20 billion deal to acquire Shaw Communications Inc., which was first announced in 2021 and gained approval in March after a legal fight with Canada’s antitrust body. 

The transaction garnered investor orders for around three times the size of the bond tranches, according to people familiar with the matter. Demand varied between 48 buyers for the three-year bonds and 77 investors for the 10-year portion. 

Read More: Rogers Hires Banks to Refinance Debt After Shaw Acquisition

RBC Capital Markets, Toronto Dominion and Bank of Nova Scotia managed the bond sale, according to Bloomberg-compiled data. 

A press officer for Rogers didn’t reply to a request for c

Bipartisan, multi-jurisdictional approach needed on housing: Lisa Raitt

Ben Cousins, BNN Bloomberg

In the midst of a growing housing affordability crisis in Canada, a former federal cabinet minister is calling for different political parties and levels of government to work together on the issue.

Lisa Raitt, who served various ministerial roles under former Conservative prime minister Stephen Harper, said finger-pointing between parties and jurisdictions must end if a solution to Canada’s housing problem is to be found. 

“The only entity that can put the pressure on different political parties to do that is the voter and the taxpayer,” she told BNN Bloomberg in a television interview Tuesday. 

“Once you step back, you’ve got to come up with solutions and Canadians are hurting and they’re terrified of their next time of renegotiating their mortgage.” 

Raitt, who is now vice chair of Global Investment Banking at CIBC, highlighted to two main factors she sees as driving Canada’s housing shortage: record immigration levels and housing demand. 

“We are on a bit of a burning platform right now and a little bit of it has to do with the higher rates of immigration and a lot of it has to do with the fact that there’s a great demand,” she said. 

A 2022 report from the Canada Mortgage Housing Corporation found Canada needs to build 5.8 million new homes by 2030 to reach affordability. Meanwhile, housing starts declined by 10 per cent in July to 255,000.

Amid the housing crunch, Canada is boosting immigration levels to new heights to supplement the needs of the country’s aging workforce. With the government expected to announce new immigration targets on Nov. 1, Immigration Minister Marc Miller told Bloomberg last month he doesn’t think Canada is “in any position” to lower its goals. 

In an interview with BNN Bloomberg last month, former Liberal deputy prime minister Sheila Copps blamed the affordability crisis on decades of poor policy that began when provinces took over much of Canada’s housing policy in the 1980s.

Raitt admitted during her time in federal politics, housing was considered a provincial issue and did not have a national strategy. Now, she said, the problem has escalated. 

“We did give large sums that would be transferred to the provinces to deal with it, but it’s such a ubiquitous problem that everyone expects everyone to work together on it,” she said. 

With files from Bloomberg

 

​Rate hold could push indebted homeowners into rental market: Experts

Iva Poshnjari, BNN Bloomberg\

The Bank of Canada’s decision to hold interest rates at elevated levels could push over-leveraged homeowners into the rental market – driving prices higher in turn, experts say. 
 
The central bank decided to keep its overnight lending rate at five per cent on Wednesday, holding borrowing costs and mortgage rates at high levels after its steep hiking cycle began early last year.
 
For some Canadians homeowners who are already struggling to keep up with their mortgage payments, a period of elevated interest rates will be enough to force them into selling their properties, John Pasalis, president of Realosophy Realty, told BNNBloomberg.ca on Wednesday. 
 
“We’re likely still going to see pressure in the rental market because even though rates may be on hold, there is a lot of over leveraged homeowners who will be forced to sell and enter into the rental market, at least for the short term,” he said. 
 
Pasalis explained that in this environment, it is not uncommon to see landlords downscale their homes in an effort to clear some debt, or offload investment properties, which would displace current renters into a higher-priced market. 
 
“While we are seeing more inventory come online and pricing cooling just a bit, I think the pressures in the rental market will persist so long as rates remain high,” Pasalis cautioned 
 
A hold on rates will bring relief for some landlords, but every month there’s an investment property owner who simply can’t afford to keep up with the costs, said Davelle Morrison, broker at Bosley Real Estate Ltd.
 
“With each month that passes you will have some people that will be forced to sell in this environment, and ultimately renters end up playing musical chairs because there is little supply for them to choose from,” she told BNNBloomberg.ca on Wednesday. 
 
As a result, Morrison believes that most renters will stay in their units for as long as possible. 
 
“Rents are just so high. I would think that for a lot of renters they would stay put and not move in the heightened rate environment,” she said. 

Bank of Canada may need to raise rates again, despite this week's hold: Macklem

Nojoud Al Mallees, The Canadian Press

The Bank of Canada may have to raise interest rates further, given that inflation may stay high for some time, said governor Tiff Macklem Thursday.

His speech at the Calgary Chamber of Commerce came one day after the central bank decided to hold its key interest rate steady at five per cent as signs of an economic slowdown grow.

Statistics Canada reported last week that the economy shrank in the second quarter, while the unemployment rate has been rising for three consecutive months.

However, Macklem said on Thursday that the central bank’s governing council agreed rates may need to rise again.

“In trying to balance the risks of under- and over-tightening, the governing council decided yesterday to keep the policy rate at five per cent and agreed there may be a need to raise the policy rate further if inflationary pressures persist,” Macklem said.

Canada’s inflation rate was 3.3 per cent in July, but the Bank of Canada expects inflation to flare up in the coming months before declining again.

Macklem also held a news conference Thursday, where he faced questions from reporters about the central bank's political independence in light of comments from elected officials on its policy decisions. 

Finance Minister Chrystia Freeland faced some criticism Wednesday for appearing to praise the central bank for holding its key rate, saying in a statement that the decision was "welcome relief for Canadians."

Later that day, the NDP — which has been critical of the rate hikes — went further, suggesting the finance minister should ask the Bank of Canada to stop raising interest rates.

Macklem said elected officials are clearly hearing from constituents about the pain high inflation and rising interest rates are causing. The central bank is hearing the same thing, he said. 

The governor wouldn't comment on what he would do if the finance minister ever issued a directive to the central bank regarding interest rates — something that's never happened in the Bank of Canada's history but is within the powers of the minister.

"I think the deputy prime minister has been very clear that she fully respects the independence of the Bank of Canada," Macklem told reporters.

As the central bank focuses on its task of wrestling inflation back down to two per cent, the governor spent a considerable amount of time in his speech defending the central bank's inflation target. Although inflation may seem close to two per cent, he said, reaching two per cent is crucial to maintaining predictability and stability in the economy.

The governor said the slowing progress on getting inflation down either means previous rate hikes need more time to take effect, or interest rates aren’t high enough yet.

The central bank is looking for evidence that inflation is not only falling, but that large price increases are becoming less common across the economy.

For that to happen, Macklem said demand in the economy needs to continue slowing.

“But I want to be clear – we are not trying to kill economic growth,” Macklem said.

Instead, the governor said the best way the central bank can support the economy is by making sure inflation comes back down to the two per cent target.

When asked whether Canada is already in a recession, Macklem said he doesn't think so. 

As to whether the country is headed for one, Macklem said Canada may experience two consecutive slightly negative quarters of growth, which would meet the technical definition of a recession. 

"I don't think a couple of very small negatives are what most people think of when they think of a recession. It's not a big contraction in output. It's not a large rise in unemployment," he said. 

This report by The Canadian Press was first published Sept. 7, 2023.

 

Premiers, finance minister welcome Bank of Canada's interest rate hold

Ben Cousins, BNN Bloomberg

Canadian politicians welcomed the Bank of Canada’s decision to hold interest rates, though one economist was skeptical that calls for a rate pause from a handful of premiers across the political spectrum had a real impact on the policy move.

On Wednesday, the Bank of Canada Governor held its benchmark rate at five per cent, as the bank works towards its goal of bringing inflation down to two per cent. 

The rate hold, which was in line with most economists’ expectations, came after premiers of three provinces made the unusual decision to call for a pause to interest rate hikes, which they argued has been putting a squeeze on their constituents. 

Newfoundland and Labrador Premier Andrew Furey was the third Canadian premier to call for a rate pause, following similar appeals Ontario’s Doug Ford and B.C.’s David Eby – the three politicians representing Liberal, Progressive Conservative and New Democratic governments, respectively.

Furey issued a letter on Tuesday citing the “negative impacts continued interest rate increases are having on Canadians.” 

Speaking to reporters following the Bank of Canada announcement, Furey called the hold “great news for Newfoundlanders and Labradorians.” 

“On the balance of the day-to-day impacts and rightfully pursuing escalating inflation rates, this is the right move in my opinion right now and I applaud the Bank of Canada for their decision,” he said.  

Ford, who had also written to Macklem to ask for a rate pause, called the announcement from the central bank “good” in a Tweet posted Wednesday. Earlier in the week, Ford he had written to Macklem highlighting the “devastating impact” rate hikes have had on people.

Federal Finance Minister Chrystia Freeland also weighed in on Wednesday, calling the pause “welcome relief.”

“As the Bank continues this work, my number one priority is to use all the tools at my disposal and to work with partners at other levels of government across Canada, to ensure that interest rates can come down as soon as possible,” Freeland wrote in a statement. 

BNNBloomberg.ca has reached out to Eby’s office for comment. The B.C. premier was the first to ask the central bank to hold rates last week, saying that people in his province were “already hurting.” 

POLITICAL THEATRE

David Doyle, head of economics Macquarie, said he doesn’t believe political pressure on the Bank of Canada impacted its policy decision. 

“It doesn’t surprise me to see the political theatre take place. I think that politicians are inclined to grandstand in that way,” he told BNN Bloomberg in a television interview on Wednesday.

“The Bank of Canada remains independent. I don’t think what the premiers or the finance minister are saying will have much effect at all what Governor (Tiff) Macklem is inclined to do.” 

With files from Bloomberg News 

 

Politician appeals to BOC on rate hikes 'unfortunate,' policy prof says

Nojoud Al Mallees, The Canadian Press

Two premiers have sent letters to Bank of Canada governor Tiff Macklem urging against another rate hike, as the provincial leaders attempt to sway the central bank's interest rate decision slated for Wednesday.

Ontario Premier Doug Ford sent a letter on Sunday saying families and businesses cannot afford the "crushing impact of further rate hikes," echoing a letter British Columbia Premier David Eby sent on Thursday. 

Associate professor and founding director of McGill University's Max Bell School of Public Policy, Christopher Ragan says it's "unfortunate" that the premiers felt that sending these letters was useful. 

"It's pretty easy to find people that will argue that the (central) bank shouldn't raise interest rates anymore," Ragan said.

But having premiers send letters to the governor "invariably brings in a political element" to the debate, he said. 

The Bank of Canada is an independent institution that receives its mandate from the federal government and is responsible for maintaining a two per cent inflation target. 

However, the central bank has been no stranger to political pressure and critiques over the last couple of years as it has navigated a tumultuous economic period marred by a pandemic-induced downturn followed by runaway inflation. 

With inflation still above two per cent, monetary policy expert Jeremy Kronick said the central bank is required to carry out its mandate. 

"They don't control the mandate: the mandate is set by an agreement between them and federal government. And so for them, they have to continue to do what they think is best to get inflation back down to two per cent," said Kronick, who heads financial and monetary policy research at the C.D. Howe Institute. 

The letters from the premiers come as forecasters widely anticipate the central bank to hold its key interest rate steady as the economy begins to buckle under the weight of higher interest rates. 

The Bank of Canada is not commenting on the letters Macklem has received due to a communications 'blackout' period it observes ahead of interest rate announcements.

The central bank has aggressively raised interest rates since March 2022 to clamp down on decades-high inflation, including raises at its last two meetings in June and July in response to a hot economy.

But over the summer, more signs have emerged that the economy is actually slowing down: the unemployment rate has been on the rise and real gross domestic product unexpectedly contracted in the second quarter.

These signs have convinced most forecasters that the central bank will stay on the sidelines this week, holding its key interest rate at 5.0 per cent — the highest it's been since 2001. 

The central bank has faced opposition for its rate hikes from labour groups and some policy thinkers who argue that the suffering the rate hikes will cause workers exceeds the benefits.

Politicians have also weighed in on the Bank of Canada's operations over the last couple of years. Conservative Leader Pierre Poilievre has attacked the Bank of Canada for its policy response to the COVID-19 pandemic and vowed to fire Macklem if his party forms government.

Meanwhile, NDP Leader Jagmeet Singh has argued the Bank of Canada's approach to inflation is "wrong," calling its key interest rate a "blunt" instrument. 

The political critiques have raised concerns about interference into the Bank of Canada and questions about how elected officials should approach discussing the central bank's policies. 

Ragan said monetary policy shouldn't be protected from the type of criticism other policies face, but history shows that central banks that are not independent from government are more likely to make policy choices that fuel inflation.

Instead of debating its day-to-day operations, Ragan said elected officials should focus on debating what the Bank of Canada's mandate should be. 

The central bank's mandate dictates what the target inflation rate should be, for example, and could stipulate other priorities for the institution.

"I think that is a very important place where government, elected officials get involved. But then once you've established what the mandate is, I think there's a real advantage in just letting the central bank do its job," he said. 

This report by The Canadian Press was first published Sept. 5, 2023.

Changes to minimum tax to add $2.6 billion over five years for feds: PBO

The Canadian Pres

The parliamentary budget officer says the federal government's proposed changes to the alternative minimum tax will generate an additional $2.6 billion in revenue over five years.

The tax aims to ensure high-income earners and trusts don't pay disproportionately less in taxes than other taxpayers. 

The Liberal government proposed in the 2023 budget changes to the alternative minimum tax so that the highest income earners pay the greatest share of the revenue generated from the tax.

The changes, which come into effect in January 2024, would increase the minimum tax from 15 per cent to 20.5 per cent.

At the same time, it would increase the amount that is excluded from the calculation from $40,000 to $173,000. 

While the budget watchdog finds the changes will lead to the highest-income earners paying the largest share, it does not find that to be the case with trusts.

This report by The Canadian Press was first published Sept. 7, 2023.

THE POLITICAL ECONOMY OF FILM FESTS

High-cost resale tickets are new market reality, TIFF CEO says

Indira Kannan, BNN Bloomberg

High inflation is not holding Toronto film buffs back from spending on movie tickets, according to the CEO of the Toronto International Film Festival (TIFF), which is set to kick off on Thursday for its 48th year.

“The response has been at least the same as last year if not a little bit higher,” Cameron Bailey said in an interview with BNNBloomberg.ca.

“We haven’t seen a downturn in terms of tickets and our audience’s interest in attending the festival.”

TIFF, which will run until Sept. 17, is regarded as the world’s largest public film festival.

In past years, cheering fans have gathered at screening venues in Toronto’s downtown to catch a glimpse of film stars attending movie premieres and walking red carpets. This year, the Hollywood star quotient will be a little lower due to the ongoing actors’ strike – but that has not affected ticket sales either, says Bailey.

RESALE PRICES BALLOON

Demand is apparently strong enough for tickets to be offered for resale at high prices by scalpers.

Recent social media users and news reports have pointed out that tickets for some screenings have been listed on resale site Stubhub for hundreds of dollars, as well as on Ticketmaster, the site TIFF has been using to sell festival tickets. 

Bailey said this is part of the resale market reality for popular events, whether it is a concert or a film festival screening.

“I think the resale market for anything that has a ticket has become quite well established for concerts, sports events and different things,” he said.

“This is not the first year when resale prices have been higher than the price we’re charging. And it’s just part of the phenomenon of the most in-demand event, whether it’s a football match or a concert by your favourite artist. There’s a market for those things that sometimes will drive up the price.”

This year, TIFF has set prices for regular screenings between $26 and $32, while premium screenings can set you back anywhere between $39 and $88.

All prices are inclusive of taxes and fees. Bailey noted that TIFF is trying to make tickets more affordable for various sections including young film fans and what the festival calls “equity deserving communities.” People under 25 and community partners can access select screenings from $13.

“There’s also a program which is supported by one of our major partners Visa, which offers free access to a number of different community groups to festival films,” Bailey added.

STRIKE IMPACT

The festival has several workarounds in place to blunt the impact from the ongoing strikes by Hollywood writers and actors. The festival has invited independent filmmakers, actors who will be at TIFF in other capacities as for instance, directors, people with interim agreements allowing them to promote their films, as well as relying on stars from other film industries.

Bailey explained that only 15 per cent of the festival’s lineup is from companies affected by the strike.

“Most of our lineup is independent and international,” he said. “We’ve got people like Andy Lau, Anil Kapoor and others who are coming to town with entirely independent and international films and they’re not affected by the strike.”

Hollywood fans can expect to see actors Sean Penn, Dakota Johnson and Viggo Mortensen, among others.

“No shortage of talent,” Bailey emphasised.

ECONOMIC PRESSURE

Economic pressures are pinching TIFF in other ways, however. The festival will lose its long-time lead sponsor, telecom giant and BNN Bloomberg’s parent company, Bell, after this year.

Other TIFF events have also seen sponsors pull back, Bailey said.

“Some of our partners who are maybe more focused on the red carpet part of the festival have stepped back in some cases, so we are looking to make that lost revenue up and to find new partners who can step in,” he said.

The combination of strikes and rising costs have also hurt TIFF’s hospitality partners and local businesses that rely on crowds of filmgoers and publicity from film star visits.

Bailey said one of the festival’s leading partners estimated they would lose about a fifth of their usual festival business this year.

“It’s not the majority by any means but it’s something that you would certainly feel,” Bailey admitted. 

This year, TIFF will screen over 250 films from 74 countries.

The opening film is Studio Ghibli’s Japanese animated fantasy film “The Boy and The Heron,” directed by Hayao Miyazaki. The Sylvester Stallone documentary “Sly” will close the festival.

BNN Bloomberg is owned by Bell Media, which is a division of BCE.