For nearly two years now I have complained about the federal government’s purchase of the Trans Mountain pipeline.
I still believe it was mostly a political move.
The Trudeau government paid at least a billion more than the line was worth just so they could control whether it got built, according to their best political interests.
Not according to national interests. Or Alberta’s economic interests. But according to what was best for the Liberal Party of Canada.
They bought it so they could tell economic-minded voters in last fall’s federal election that they truly were concerned about jobs and finances. Then they deliberately went along with efforts by Indigenous radicals to delay the project in court, so they could say out of the other side of their mouths that were listening to First Nations and environmental concerns.
How is it any different, then, for the provincial United Conservative government to invest heavily in the Keystone XL pipeline to convince TC Energy to finish the project that will take over 800,000 barrels of Alberta oil to the U.S. Gulf Coast every day?
The truth is, there is a lot about the UCP move that is equally problematic with Ottawa TMX purchase.
However, there is one big difference — and I think it is the essential difference. The UCP truly want Keystone built. They’re investing in it because they believe in it.
I’ve never had full faith in the Liberals’ objectives.
It’s also critical that the Alberta government has not become the outright owner of the pipeline, the way the federal government has made itself the sole proprietor of the pipeline to the West Coast.
A private-sector company with a motive to get Keystone built remains in the driver’s seat. Important decisions over the design and construction are not being left to bureaucrats and politicians, the way they are with TMX.
For instance, remember the big fanfare last fall about work on Trans Mountain finally getting under way?
What work? Some rail cars full of new pipe got moved into position for nice photo ops. And a bit of trench got dug in Alberta where it was pretty obvious there would be few protestors.
Hmm, do you think those actions were based on real business considerations? Or is it possible they were merely symbolic, having more to do with the federal election than Trans Mountain’s bottom line?
There are huge risks to what the Kenney government is doing.
What if Donald Trump doesn’t get re-elected as U.S. president this fall and an anti-Keystone Democrat and Congress are elected? The project could get cancelled again, as it did during the Obama administration.
What if oil doesn’t come back up to $60 a barrel, as projected for 2021 and beyond? Or if Western Canadian Select lags way behind lighter grades of oil?
It was below $4 a barrel on Monday.
Moody’s, the credit rating service, actually downgraded TC Energy’s debt from stable to negative on the Alberta announcement. Moody’s was less worried about TC’s credit risk when it wasn’t building Keystone than after it said it was.
(On the other hand, the company’s share price rose by nearly seven per cent on the news.)
The way the Kenney government is investing in Keystone is smarter than the way the Trudeau government invested in Trans Mountain.
Rather than buying the line outright, it is buying $1.5 billion in shares now and guaranteeing loans of $6 billion next year. Both will be paid out once oil begins to flow in 2023.
As a taxpayer, I don’t like government intervention like this.
But in these crazy times, the Alberta boost is probably the only way to get this project done.
Australia to Toughen Foreign Investment Laws Amid China Spat – Yahoo Canada Finance
(Bloomberg) — Australia will implement a tough new screening regime on foreign investors seeking to buy sensitive assets, as it bids to bolster national security amid a diplomatic row with China.
Telecommunications, energy, technology and defense-manufacturing companies will be included in the zero-dollar threshold for screening. The changes, intended to be legislated this year and enforced from Jan. 1, will include a new national security test and give the treasurer last-resort powers to force asset sales.
The changes could have implications on Australia’s relationship with its largest trading partner China, which have soured this year after Prime Minister Scott Morrison led calls for an independent probe on the origins of the coronavirus in Wuhan.
Beijing responded with verbal attacks on the conservative government, saying it was doing the bidding of key ally the U.S., while new tariffs on Australian barley and a ban on beef from four meatworks have raised fears in Canberra that the Chinese government is using “economic coercion” in retaliation.
Asked by a reporter in Canberra on Friday whether the changes will create new tensions with China, Morrison said: “I don’t believe why it should. Countries make decisions on their own interests for their own rules and we respect the rules and interests of other countries.”
Australia isn’t alone in ramping up its foreign investment screening — in recent years, economies including the U.S., Japan and the European Union have toughened their own laws to protect national security. The new announcement comes a day after Morrison signed a crucial defense agreement with Indian Prime Minister Narendra Modi and upgraded ties to a Comprehensive Strategic Partnership, as both nations navigate fraught relations with China.
“We have to be on our guard against China purchasing critical infrastructure and investing in our vital industries, so it makes sense for the government to extend and deepen its oversight of foreign investment,” said Malcolm Davis, a senior analyst at the Australian Strategic Policy Institute in Canberra. “China will probably take umbrage but it needs to understand that Australia makes these decisions in its own interests.”
The U.S. remains Australia’s largest source of approved investment from overseas, comprising A$58.2 billion ($40.4 billion) — or 25% of the total — in the year ending June 2019. China comprised 5.7% of the total, valued at A$13.1 billion.
Under Australia’s current rules, state-owned enterprises already have zero-dollar screening threshold while most private investments under A$275 million, often for large land holdings, are waved through. The monetary thresholds have meant some investments that have raised national-security concerns have escaped screening.
Chinese purchases of agricultural land, including iconic properties such as the Cubbie Station in Queensland and the Van Diemen’s Land dairy in Tasmania, have proved particularly contentious in Australia.
Call in Powers
“The reforms will ensure that our foreign investment regime is able to respond to emerging risks and global developments,” Treasurer Josh Frydenberg said, labeling the changes the most significant in the area since 1975. The government will spend an additional A$54 million to bolster compliance and monitoring, he said.
After the changes, the treasurer will have power to “call in” an investment before, during or after an acquisition for review if it raises national security risks and has not captured by the “sensitive national security businesses” definition.
“Technology has been evolving and our geopolitical climate has become more complex,” Frydenberg told reporters on Friday. “In fact, the world over, governments are seeing foreign investment being used for strategic objectives, not purely commercial ones.”
While the treasurer will have the power order disposal of approved foreign investments where national security risks emerge post-approval, the last-resort power will not be retrospective.
As treasurer in 2016, Morrison ordered the Foreign Investment Review Board to step up scrutiny of foreign investment in state-owned infrastructure after a strategic port in Darwin used by the U.S. military was leased to a Chinese company. The prime minister on Friday ruled out the possibility of that sale, which at the time escaped the regulator’s scrutiny as it was managed by the Northern Territory government, being revoked.
Sandy Mak, partner and head of corporate at Corrs Chambers Westgarth, said she looked forward to seeing whether details in the draft legislation due for release next month would make a fundamental difference to existing rules, and which sectors would be classified.
“The government’s objective here is protect sensitive assets and you’d hope when the legislation comes out it will achieves that without stymieing investment in the types of sectors and businesses that need it most,” Mak said. “Anything oil and gas related for energy independence, anything telecommunications related, and anything defense related is definitely going to be top of their list,” she said, while data-related investments may also be targeted.
Before Australia’s calls for a probe into the origins of the coronavirus, its diplomatic ties with Beijing were already under stress. The government cited Beijing’s “meddling” into national affairs as a catalyst for its anti-foreign interference laws passed in 2018, the same year it banned Huawei Technologies Ltd. from helping build its 5G network.
FIRB Chairman David Irvine welcomed the new screening package, saying it “appropriately addresses increasing risks to the national interest whilst ensuring Australia remains welcoming and open to foreign investment.”
(Updates with Morrison comment on China in 5th paragraph.)
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Australia shakes up foreign investment laws for national security – TheChronicleHerald.ca
By Kirsty Needham and Melanie Burton
SYDNEY (Reuters) – Australia announced the biggest shakeup of its foreign investment rules in almost half a century on Friday, including additional powers to force the divestment of a business if it creates a national security risk.
Citing the need to balance economic and national security, Treasurer Josh Frydenberg said all foreign investors will face greater scrutiny when bidding for sensitive assets, regardless of the size of the deal and whether the buyer is private or state-owned.
“Technology has been evolving and our geopolitical climate has become more complex,” Frydenberg said in Canberra. “In fact, the world over, governments are seeing foreign investment being used for strategic objectives not purely commercial ones.”
In one major change, the Treasurer will be given a last-resort power to vary or to impose conditions on a deal or force a divestment. A Treasury document said the power would not retrospective.
Frydenberg did not provide full details of which business sectors would be targeted under the changes, which will be made public in the next few weeks, but he did give some indication of areas of interest.
The definition of a national security business would likely cover telecommunication companies, energy and utilities businesses, the defence supply chain, and businesses that collect, store and own data deemed critical to Australia’s national security and defence, he said.
The changes, the biggest overhaul of foreign investment policy since the current framework was established in 1975, will effectively make permanent a temporary tightening of foreign investment regulations announced in March to prevent fire sales of distressed assets during the coronavirus crisis.
Under current laws, most private investments under A$275 million ($190.8 million) are not screened, while the threshold is A$1.2 billion for companies from countries such as China which have free trade agreements with Australia. The threshold is zero for state-owned enterprises.
Frydenberg did not single out China, or any other country, when announcing the overhaul but the Chinese government has in the past raised concerns with Australia about changes to foreign investment rules.
Chinese companies have been major investors in Australian resources, agriculture and property.
Public disquiet over the sale of the Port of Darwin in 2016 to Chinese company Landbridge prompted a rule change to require approval from the country’s Foreign Investment Review Board (FIRB) for critical infrastructure deals.
China dropped from second to fifth in the list of countries providing the largest sources of approved foreign investment in Australia for 2018-2019. The United States was first, followed by Canada, Singapore and Japan in 2018-2019. Chinese investment fell by almost 50% to $13.1 billion ($8.4 billion) in 2019.
The government plans to release a draft of the new rules by July for industry consultation before they are implemented on Jan. 1, 2021.
($1 = 1.4395 Australian dollars)
(Reporting by Kirsty Needham and Melanie Burton, additional reporting by Renju Jose; Editing by Stephen Coates and Jane Wardell)
SmartCentres Real Estate Investment Trust Announces $300 Million Series V and $300 Million Series W Senior Unsecured Debenture Issues – GlobeNewswire
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
TORONTO, June 04, 2020 (GLOBE NEWSWIRE) — SmartCentres Real Estate Investment Trust (“SmartCentres”) (TSX:SRU.UN) announced today that it has agreed to issue $300 million aggregate principal amount of Series V senior unsecured debentures and $300 million aggregate principal amount of Series W senior unsecured debentures on an agency basis. The Series V debentures will carry a coupon of 3.192% and will mature on June 11, 2027 and the Series W debentures will carry a coupon of 3.648% and will mature on December 11, 2030. The debentures are being offered by a syndicate of agents with Scotia Capital as the lead left bookrunner, RBC Capital Markets, BMO Capital Markets, CIBC Capital Markets, National Bank Financial, and TD Securities as joint bookrunners and co-leads, and Desjardins Securities, Canaccord Genuity, Raymond James, Casgrain, HSBC Securities (Canada), Industrial Alliance Securities and Stifel Nicolaus Canada as co-managers. The two offerings are expected to close on or about June 11, 2020. DBRS Limited has provided SmartCentres with a provisional credit rating of BBB (high) with a stable trend relating to the debentures.
The net proceeds to SmartCentres from the sale of the Series V debentures and Series W debentures will be used to repay existing indebtedness and for general trust purposes.
These offerings are being made by way of a private placement to certain accredited investors in each of the provinces of Canada.
This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction. The debentures being offered have not been and will not be registered under the U.S. Securities Act of 1933 and state securities laws. Accordingly, the debentures may not be offered or sold to U.S. persons except pursuant to applicable exemptions from registration requirements.
SmartCentres Real Estate Investment Trust is one of Canada’s largest fully integrated REITs, with a best-in-class portfolio featuring 157 strategically located properties in communities across the country. SmartCentres has over $10 billion in assets and owns over 34 million square feet of income producing value-oriented retail space with 98% occupancy, on 3,500 acres of owned land across Canada.
SmartCentres continues to focus on enhancing the lives of Canadians by planning and developing complete, connected, mixed use communities on its existing retail properties. A publicly announced $12.1 billion intensification program ($5.5 billion at SmartCentres’ share) represents the REIT’s current major development focus. This intensification program consists of rental apartments, condos, seniors’ residences and hotels, to be developed under the SmartLiving banner, and retail, office, and storage facilities, to be developed under the SmartCentres banner.
SmartCentres’ intensification program is expected to produce an additional 27.9 million square feet of space; all construction commencing within the next five years, 12.4 million square feet of which is already underway.
From shopping centres to city centres, SmartCentres is uniquely positioned to reshape the Canadian urban and urban-suburban landscape. For more information, visit www.smartcentres.com.
Certain statements in this press release are “forward-looking statements” that reflect management’s expectations regarding SmartCentres future growth, results of operations, performance and business prospects and opportunities. More specifically, certain statements including, but not limited to, statements related to the anticipated use of proceeds of the offering, the date the offering is expected to close and the anticipated size of the offering, SmartCentres expected or planned development plans and joint venture projects, including the described type, scope, costs and other financial metrics; and statements that contain words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions and statements relating to matters that are not historical facts, constitute “forward-looking statements”. These forward-looking statements are presented for the purpose of assisting Unitholders and financial analysts to understand SmartCentres development potential and may not be appropriate for other purposes. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management.
However, such forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks associated with potential acquisitions not being completed or not being completed on the contemplated terms, public health crises such as the COVID-19 pandemic, real property ownership and development, debt and equity financing for development, interest and financing costs, construction and development risks, ability to obtain commercial and municipal consents for development. These risks and others are more fully discussed under the heading “Risks and Uncertainties” and elsewhere in the SmartCentres most recent MD&A, as well as under the heading “Risk Factors” in SmartCentres ‘most recent annual information form. Although the forward-looking statements contained in this press release are based on what management believes to be reasonable assumptions, including those discussed under the heading “Outlook” and elsewhere in SmartCentres’ MD&A, SmartCentres cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this press release and SmartCentres assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.
Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification, including residential development in urban markets and , continued growth along transportation nodes; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; that requisite consents for development will be obtained in the ordinary course, construction and permitting costs consistent with the past year and recent inflation trends.
For more information, please contact:
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