The move brings to an end a five-month bidding war for the Canadian firm, as the tendered shares exceed the minimum level of 55% of shares not already owned or controlled by Brookfield.
Brookfield said it will now own 68.9% shares of Inter Pipeline, which it intends to take private.
Inter Pipeline had recommended that its investors accept Brookfield’s revised C$8.58-billion ($6.69 billion) offer of cash or shares after walking away from a deal with rival Pembina Pipeline Corp.
The infrastructure fund and Pembina were bidding for Inter amid a rebound in oil prices and energy stocks from last year’s pandemic downturn.
Brookfield’s revised offer gives IPL shareholders either cash of C$20 a share or 0.25 of a Brookfield Infrastructure share.
Bloomberg news had first reported that Brookfield secured sufficient backing from IPL shareholders to push ahead with the offer.
($1=1.2821 Canadian dollars)
(Reporting by Aishwarya Nair and Anirudh Saligrama in Bengaluru and Rod Nickel in Winnipeg; Editing by Devika Syamnath and Clarence Fernandez)
5 things to know about the Evergrande situation: A simple breakdown – CTV News
The world is still waiting to find out what will happen to troubled Chinese conglomerate Evergrande and its enormous mountain of debt.
The property developer’s debt crisis is a major test for Beijing. Some analysts fear it could even turn into China’s Lehman Brothers moment, sending shockwaves across the world’s second biggest economy. Real estate — and related industries — account for as much as 30% of Chinese GDP.
The coming days and weeks will be critical. While Evergrande has a grace period of up to 30 days on an interest payment of nearly $84 million that was due Thursday, it’s supposed to make a payment on another bond next week.
That’s fueling speculation over what could happen next, with potential outcomes including a Beijing-backed bailout, restructuring or default.
Here’s what you need to know about Evergrande, and how it got to where it is now.
WHAT IS EVERGRANDE?
Evergrande is one of China’s largest real estate developers. The company is part of the Global 500 — meaning that it’s also one of the world’s biggest businesses by revenue.
The group was founded by Chinese billionaire Xu Jiayin, also known as Hui Ka Yan in Cantonese, who was once the country’s richest man.
Evergrande made its name in residential property — it boasts that it “owns more than 1,300 projects in more than 280 cities” across China — but its interests extend far beyond that.
Outside housing, the group has invested in electric vehicles, sports and theme parks. It even owns a food and beverage business, selling bottled water, groceries, dairy products and other goods across China.
In 2010, the company bought a soccer team, which is now known as Guangzhou Evergrande. That team has since built what is believed to be the world’s biggest soccer school, at a cost of US$185 million to Evergrande.
Guangzhou Evergrande continues to reach for new records: It’s currently working on creating the world’s biggest soccer stadium, assuming that construction is completed next year as expected. The $1.7 billion site is shaped as a giant lotus flower, and will eventually be able to seat 100,000 spectators.
Evergrande also caters to tourists through its theme park division, Evergrande Fairyland. Its claim to fame is a massive undertaking called Ocean Flower Island in Hainan, the tropical province in China commonly referred to as the “Chinese Hawaii.”
The project includes an artificial island with malls, museums and amusement parks. According to the group’s most recent annual report, it started taking customers on a trial basis earlier this year, with plans for a full opening “at the end of 2021.”
HOW DID IT RUN INTO TROUBLE?
In recent years, Evergrande’s debts ballooned as it borrowed to finance its various pursuits.
The group has gained infamy for becoming China’s most indebted developer, with more than $300 billion worth of liabilities. Over the last few weeks, it’s warned investors of cash flow issues, saying that it could default if it’s unable to raise money quickly.
That warning was underscored this month, when Evergrande disclosed in a stock exchange filing that it was having trouble finding buyers for some of its assets.
In some ways, the company’s aggressive ambitions are what landed it in hot water, according to experts. The group “strayed far from its core business, which is part of how it got into this mess,” said Mattie Bekink, China director of the Economist Intelligence Unit.
Goldman Sachs analysts say the company’s structure has also made it “difficult to ascertain a more precise picture of [its] recovery.” In a recent note, they pointed to “the complexity of Evergrande Group, and the lack of sufficient information on the company’s assets and liabilities.”
But the group’s struggles are also emblematic of underlying risks in China.
“The story of Evergrande is the story of the deep [and] structural challenges to China’s economy related to debt,” said Bekink.
The issue isn’t entirely new. Last year, a slew of Chinese state-owned companies defaulted on their loans, raising fears about China’s reliance on debt-fueled investments to support growth.
And in 2018, billionaire Wang Jianlin was forced to downsize his conglomerate, Dalian Wanda, as Beijing clamped down on firms borrowing heavily to push overseas.
In a recent note, Mark Williams, Capital Economics’ chief Asia economist, said that Evergrande’s collapse “would be the biggest test that China’s financial system has faced in years.”
“The root of Evergrande’s troubles — and those of other highly-leveraged developers — is that residential property demand in China is entering an era of sustained decline,” he wrote. “Evergrande’s ongoing collapse has focused attention on the impact a wave of property developer defaults would have on China’s growth.”
HOW IS IT TRYING TO MOVE FORWARD?
Evergrande said Wednesday in a filing with the Shenzhen Stock Exchange that issues regarding a payment on a domestic yuan bond have been “settled through negotiations.” The amount of interest it owed on the bond is about 232 million yuan ($36 million), according to data from Refinitiv.
While the news may placate investors, many questions still remain unanswered. Evergrande did not elaborate on the terms of the payment in its statement, and interest worth $83.5 million on a dollar-denominated bond also fell due Thursday. That deadline came and went without an update from the company.
On September 14, Evergrande announced that it had brought on financial advisers to help assess the situation.
While those firms are tasked with exploring “all feasible solutions” as quickly as possible, Evergrande has cautioned that nothing is guaranteed.
So far, the conglomerate has struggled to stem the bleeding, and has failed to find buyers for parts of its electric vehicle and property services businesses.
As of that filing, it had made “no material progress” in its search for investors, and “it is uncertain as to whether the group will be able to consummate any such sale,” it said.
The company has also been trying to sell off its office tower in Hong Kong, which it bought for about $1.6 billion in 2015. But that has “not been completed within the expected timetable,” it said.
HOW ARE INVESTORS REACTING?
Evergrande’s problems spilled onto the streets this month when protests broke out at its headquarters in Shenzhen. Footage from Reuters showed scores of demonstrators at the site last week, accosting someone identified to be a company representative.
But shareholders have been wary for months: The stock has shed nearly 85% of its value this year.
Earlier this month, Fitch and Moody’s Investors Services both downgraded Evergrande’s credit ratings, citing its liquidity issues. “We view a default of some kind as probable,” Fitch wrote in a recent note.
The situation also appears to be spooking investors in China more broadly, at a time when they’re already reeling from Beijing’s crackdown on private sector companies, particularly in the tech sector. Stocks in Hong Kong, New York and other major markets have been swayed by fears of contagion from Evergrande and a slowdown in Chinese growth.
“In our opinion, how Evergrande credit stresses will be resolved will drive market sentiment,” Goldman Sachs analysts wrote recently, referring to the credit market and the broader economy. They added that the Chinese bond market could be hit and a loss of confidence could “spill over to the broader property sector.”
WHAT COULD HAPPEN NEXT?
The Chinese government appears to be starting to intervene.
Over the past few days, the People’s Bank of China has injected some cash into the financial system, to help boost liquidity in the short term and settle nerves.
According to Bloomberg, the net injection for banks was 460 billion yuan ($71 billion) sometime this week, including 70 billion yuan ($10.8 billion) on Friday.
Authorities are clearly watching closely, while attempting to project calm.
Last week, Fu Linghui, a spokesperson for China’s National Bureau of Statistics, acknowledged the difficulties of “some large real estate companies,” according to state media.
Without naming Evergrande directly, Fu said that China’s real estate market had remained stable this year but the impact of recent events “on the development of the whole industry needs to be observed.”
Last week, Bloomberg also cited anonymous sources as saying that regulators had enlisted international law firm King & Wood Mallesons, among other advisers, to examine the conglomerate’s finances. King & Wood Mallesons declined to comment.
According to the report, officials in Evergrande’s home province of Guangdong have already rejected a bailout request from its founder. Guangdong authorities and Evergrande did not respond to a request for comment.
Beijing has few good choices. It will want to protect the thousands of Chinese people who have bought unfinished apartments, as well as construction workers, suppliers and small investors.
Authorities will also likely aim to limit the risk of other real estate firms going under. But at the same time, they have long been trying to rein in excessive borrowing by developers — and won’t want to dilute that message.
Even with cash infusions, some suggest it may already be too late to save the company.
Evergrande’s financial problems have been widely dubbed by Chinese media as “a huge black hole,” implying that no amount of money can resolve the issue.
“China has really been trying to clean up its bad corporate debt for years. And although they made some progress before the pandemic, the task often seems interminable, and that’s what you’re certainly seeing here,” said Bekink.
“The impacts from a large default by Evergrande would be remarkable.”
— Kristie Lu Stout, Julia Horowitz, Laura He and CNN’s Beijing bureau contributed to this report.
Expert says warnings about N.B.'s COVID reopening plan were voiced, ignored – CBC.ca
An infection control epidemiologist who publicly warned in July that New Brunswick was courting a COVID-19 outbreak by dropping public health restrictions too early doesn’t accept the province’s claims that its current health crisis could not be forecast.
“It was absolutely, absolutely abundantly clear in July that what they were doing was fundamentally wrong,” said Colin Furness, an associate professor at the Institute of Health Policy, Management and Evaluation at the University of Toronto.
“I’m getting sick and tired of government officials saying, ‘This was unforeseen, this was unpredictable, no one could have anticipated this.’ You can’t improve your performance or decision-making if you can’t be honest with yourself about the nature of mistakes.”
On Friday, during briefings to announce and explain the reintroduction of a provincial state of emergency and mandatory order to deal with a surging COVID-19 outbreak, New Brunswick political and health officials acknowledged the decision to lift public health restrictions at the end of July was a mistake. But they suggested they couldn’t have known the mistake they were making.
“Absolutely, all of us in this room right now, with the evidence of this rapid increase of delta virus in the province, would all agree that was not the right decision to make,” said Dr. Gordon Dow, an infectious disease expert with Horizon Health.
“But that’s with the benefit of in retrospect.”
Premier Blaine Higgs also agreed Friday that the July 30 reopening “could” have been an error. But he insisted danger signs were not apparent at the time.
“I have to reiterate that the decision we made at the time was based on the facts available and the situation our province was in, and how we would go forward. It’s always easy to look back,” he said
New Brunswick is in the middle of its largest COVID-19 outbreak of the pandemic. It has recorded more than 1,400 new cases since lifting public health restrictions in July, including 470 for the week ending last Friday.
That was the highest case count per capita in any province east of Saskatchewan for the week and has put sudden pressure on the province’s hospital system.
Furness claims that deterioration was predictable.
He said it was clear in July that New Brunswick did not have enough people fully vaccinated, especially among the young, to protect itself from an outbreak of COVID-19’s highly contagious delta variant.
He believed at the time of New Brunswick’s July reopening that public health protections like mandatory indoor masking needed to be maintained to protect against what is happening now, and said so publicly.
“There was tonnes of data available, concurrent data available about what delta was doing,” said Furness
On July 23, Higgs announced the province would be dropping all public health restrictions at midnight on July 30 even though it had not reached its goal of having 75 per cent of the eligible population fully vaccinated.
At the time of the announcement, 64 per cent of those in the province over the age of 12 had received two vaccine doses.
That was problematic enough, according to Furness, but made riskier because the majority of vaccinations were concentrated in higher age groups.
Among those under 40, just 48 per cent had been fully vaccinated at the time reopening was announced. On July 27, Furness said in an interview with CBC that New Brunswick was heading for trouble if it did not at least maintain rules requiring mask use indoors.
“People in their 80s are not serving tables in restaurants, they’re not working as grocery store clerks and they’re not going to heavy-duty parties. It’s the ones in their 20s who are. And that group is not protected,” he said
Furness was not alone in those concerns.
On July 30, just hours before New Brunswick dropped all of its mandatory public health restrictions, Dr. Theresa Tam, Canada’s Chief Public Officer of Health, recommended against abandoning masking rules until vaccination rates among the young improved.
“We have to be cautious about how we reopen,” Tam said in a national briefing about a detected rise in the delta variant in Canada that she said would soon assert itself “in every jurisdiction.”
“If the 18 to 39-year-olds can get vaccinated fully up to at least 80 per cent you can actually avert significant impacts on the health system.”
She said any province dropping public health restrictions risked having its hospital system overrun “if the vaccine rate going up is not as fast as the relaxation of measures.”
“Delta is a formidable foe,” said Tam. “We know what works. Continue masking, distancing.”
In July, the number of those fully vaccinated in New Brunswick between the ages of 18 and 39 was well short of the 80 per cent level Tam said was required to fend off the worst of a “delta driven” wave and is still below 70 per cent.
Furness said he finds excuses now that warnings were not clear enough in July are not credible.
“When you looked at the contagiousness of delta, you didn’t even need to know about vaccine effectiveness. Just looking at the spread pattern, just looking at the contagiousness, there was no way that [safely opening] was valid knowledge back then. Flat out no way.”
COVID-19 cases in Ottawa: Ontario reports 41 new infections – CTV Edmonton
Public Health Ontario is reporting 41 new cases of COVID-19 in Ottawa on Monday.
A full local snapshot from Ottawa Public Health is due this afternoon. Figures from OPH often differ from Public Health Ontario’s because the two health agencies pull data for their daily respective snapshot reports at different times of the day.
Across the province, health officials confirmed another 613 cases of COVID-19. No new deaths were reported in Ontario on Monday and another 578 existing cases are now considered resolved. The province’s rolling seven-day average continues to drop. As of Monday, the average is 621, down from 710 last week.
Around the region, Public Health Ontario added 40 additional cases, including 35 in the Eastern Ontario Health Unit, four in Hastings Prince Edward, and one in Kingston, Frontenac, Lennox & Addington.
Health Minister Christine Elliott says of the 613 new cases reported across Ontario on Monday, 454 were in people who are not fully vaccinated or who have an unknown vaccination status and 159 are in people who are fully vaccinated.
Data from hospitals across Ontario is unavailable on Mondays because some hospitals don’t report to the province on weekends.
Ottawa Public Health data suggest unvaccinated residents are 11 times more likely to contract COVID-19 than fully vaccinated residents are.
CASES OF COVID-19 AROUND THE REGION
- Eastern Ontario Health Unit: 35 new cases
- Hastings Prince Edward Public Health: Four new cases
- Kingston, Frontenac, Lennox & Addington Public Health: One new case
- Leeds, Grenville & Lanark District Health Unit: Zero new cases
- Renfrew County and District Health Unit: Zero new cases
This story will be updated. CTV News Ottawa will have the latest as it becomes available.
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