Having borrowed a fortune, you’d think Leonard Asper would better understand bankers’ psychologies. In a five-page letter mailed in early January, the CEO of the impecunious Canwest media empire urged creditors not to tip its newspaper division, Canwest LP, into court-supervised restructuring. Calling such a move premature, Asper claimed it would needlessly harm employees, suppliers and other stakeholders. And “with each day that goes by, the chance of greater recovery for stakeholders increases,” he wrote. Asper evidently forgot the luxuries of being a senior secured creditor. Not agonizing over others’ misfortunes is among them. Canwest LP “is insolvent,” replied Scotiabank executive vice-president Jane Rowe. “It is plain and obvious that it cannot support its massive debt.” Unable to placate creditors any longer, Canwest LP filed for court protection on Jan. 8. Under a proposal, its assets (including titles like the Calgary Herald, Ottawa Citizen and Montreal Gazette) will be transferred to a company controlled by the banks. Under such a scenario, Asper said it’s “an almost certainty” subordinated debtholders and his Canwest Media holding company will get nothing.
Icelandic president Olafur Grimsson opted not to approve legislation on the repayment of $5.7 billion owed to Britain and the Netherlands for their help bailing out an Icelandic Internet bank, and has put the decision to national referendum. Britain retaliated by saying Iceland could become an international pariah, and might put its desired speedy entry into the EU at risk if the vote is “no.” Britain and the Netherlands both have the authority to reject Iceland’s bid.
French super-major Total SA purchased a US$2.25-billion minority stake in Chesapeake Energy’s Barnett shale interests. It’s another vote of confidence in new drilling techniques that make the development of unconventional natural gas deposits commercially lucrative. And, in the wake of Exxon’s US$31-billion purchase of XTO Energy and their extensive shale gas assets, it’s good news for Canadian companies like EnCana, who’ve been aggressive with shale gas plays.
There’s nothing big about Detroit’s Big Three automakers anymore, except the bailout GM and Chrysler received last year. U.S. sales of cars and light trucks dropped 21% last year and hardest hit was Chrysler. Thanks to a lack of new products and a reputation for poor quality, it sold just 931,000 vehicles in 2009 – its worst performance since 1962.
The Canadian-born director now has the two highest-grossing films of all time. Avatar, his special-effects-laden tale of blue-skinned aliens and the humans who love them, has proven insanely popular with international audiences, surpassing $1 billion in worldwide ticket sales in less than three weeks. Having blown past the Lord of the Rings, Batman and Pirates of the Caribbean franchises, Avatar now sits atop the box-office charts alongside Cameron’s own Titanic, which earned $1.8 billion in 1997.
More than 3,000 former employees of the old Southam newspaper chain face bleak retirements. The company managing their pensions and other benefits, Hollinger Canadian Publishing Holdings, filed for creditor protection in December. The company is beset by its holdings of impaired asset-backed commercial paper, the bankruptcy of its American parent and costly legal settlements. It has no business besides managing the plans, some of which are in deficit.
Dubai may be stealing headlines with the debut of the world’s tallest building this month, but neighbouring Abu Dhabi is the real powerhouse in the United Arab Emirates. Flush with oil wealth, Abu Dhabi extended a US$10-billion lifeline to state-owned conglomerate Dubai World last month, which is struggling to restructure more than $20 billion in debt. The bailout helped to calm jittery world markets concerned about a default.
As if taking off your belt and shoes didn’t already make air travel unpleasant enough, in the wake of Christmas Day’s failed “underwear bomber” terrorist attempt, Transport Canada announced a ban on almost all airline carry-on items, including books and magazines. Travellers can only hope the ban is temporary, though Transport Canada says it has informed its security screeners to exercise “common sense.”
The man who orchestrated the disastrous merger between Time Warner and AOL 10 years ago issued an apology on CNBC last week. “I presided over the worst deal of the century, apparently,” said Gerald Levin, Time Warner’s former CEO. “I’m really very sorry about the pain and suffering and loss caused.” Levin urged other executives at companies such as Lehman Bros. to own up to their mistakes. Sure, his words are far too late and will do nothing to restore shareholder value, but in an age in which business titans are reluctant to accept blame, Levin deserves at least some credit.
The momentum that saw Canadian property prices surge to new highs in the final quarter of 2009 is likely to continue through the early months of 2010, most analysts think – especially with an increase in interest rates expected later in the year. Meanwhile, the current combination of cheap money, seasonal undersupply and the hangover from the recession make for a nationwide seller’s market.
Independent financial advisers have been eating away at the foundation of traditional Wall Street firms. According to Boston-based research firm Cerulli Associates, brokers fled established employers last year, taking an estimated $188 billion in client accounts with them.
New York City has filed a $53-million lawsuit against the telecom company over a decades-old land sale. Verizon paid $17 million in 1972 for the rights to construct a 771,003-square-foot building on city-owned land, and then allegedly built a tower with an extra 275,000 square feet. No one noticed until 2007, when Verizon sold part of the building, widely considered the ugliest in town.
Filings for bankruptcy in the U.S. last year increased by 32% over 2008, creating a surge in business for the lawyers that handle the paperwork. In Arizona, where filings spiked by 77%, one law firm doubled its staff to deal with the increased business. A lawyer in California, a state with a 58%, increase, told The Wall Street Journal that she “couldn’t see over the files” on her desk.