Canadian Big Deals
GM & Chrysler bailouts; Sinopec/Addas; Viterra/ABB
The American Lawyer
By Laura King
September 01, 2009
GM & CHRYSLER BAILOUTS
Though thousands of Canadians work in the auto industry, their country has no car companies of its own. That’s why Prime Minister Stephen Harper said that Canada had to contribute billions to the recent bailouts of General Motors Company and Chrysler Group LLC. If it didn’t kick in, Harper warned that his country risked losing jobs to the United States.
On June 1 Harper announced that Canada would extend $6.2 billion in aid to GM, and the province of Ontario would give another $3.2 billion. In exchange, Canadian taxpayers now own 12 percent of the restructured GM. The company has agreed to maintain the Canadian proportion of its North American manufacturing capacity at 16 percent. GM has also promised to use some of the Canadian funding to boost research and development, and to launch five new vehicles. Under the deal, GM did not file for bankruptcy protection in Canada, but settled out of court with stakeholders who agreed to the restructuring plan.
GM has closed one plant in Ontario and plans to shutter another. Over the next five years, it expects its Canadian workforce to drop from 20,000 to 7,500 (those totals include a facility that the company runs jointly with Japan’s Suzuki Motor Corporation). In addition, GM has eliminated about 250 dealerships across the country.
The GM investment was preceded by a smaller contribution to Chrysler, announced March 31. In exchange for $2.4 billion from Canada and $1.1 billion from Ontario, Canadian taxpayers received a 2 percent stake in Chrysler. The U.S. government, the United Auto Workers trust fund, and Fiat S.p.A. own the rest of the reorganized automaker. Fiat, the Italian automaker, has the largest stake and is responsible for running the new Chrysler.
Prior to the bailout, Chrysler said in March that it would cut the third shift at its plant in Windsor, Ontario. But on July 11 it announced that it would keep the third shift, saving 1,200 jobs at the minivan factory.
Unless otherwise noted, the Canadian government, Export Development Canada, Canada Development Investment Corporation, and the Ontario government used the same counsel on both the GM and Chrysler investments. For all parties, only Canadian counsel are listed.
For the Government of Canada (Ottawa)
Department of Justice: Assistant deputy minister of business and regulatory law Pierre Legault, senior general counsel Anne-Marie Lévesque, senior counsel Alexia Taschereau, and counsel Anne Boudreau and Mark Taggart.
Cassels Brock & Blackwell: Financial services: David Budd, Marc Mercier, Charles Newman, and Michael Weinczok. Bankruptcy and insolvency: Joseph Bellissimo and Bruce Leonard. Tax: Ken Snider. (All are in Toronto.)
For Export Development Canada (Ottawa)
The agency is a lender to General Motors of Canada Limited and Chrysler Canada Inc., and a debtor-in-possession lender to General Motors Company and Chrysler Group LLC.
McMillan: Restructuring and finance: Andrew Kent. Restructuring: Max Mendelshon, Wael Rostom, and associate Tushara Weerasooriya. Finance: Chris Bennett, Judie Jokinen, Robert Scavone, Peter Willis, and asso-ciates Vivian Chan and Andrea St. Bernard. Real estate: Robert Antenore and David Slan. (All are in Toronto except for Mendelshon, Rostom, and Jokinen, who are in Montreal.)
For Canada Development Investment Corporation (Ottawa)
CDIC is a government-owned company that holds Canada’s equity stakes in GM and Chrysler.
Torys: Corporate: Patrice Walch-Watson. Private equity: Darren Baccus. Tax: Peter Keenan. Opinions: Wilfred Estey. (Walch-Watson and Esty are in Toronto; Baccus and Keenan are in New York.) Torys has advised CDIC on significant matters since the corporation’s creation in 1982.
For the Province of Ontario (Toronto)
Ministry of Economic Development and Trade: Legal director Mark Warner and senior counsel Lawrence Fagan, Susan Snelgrove, and Jim Stewart.
Ministry of Finance/Ministry of Revenue: Director James Sinclair, deputy director Malle Hanslep, and counsel Kevin O’Hara and Marilyn Stanley.
Ontario Financing Authority: Legal director Corey Simpson.
Goodmans: Restructuring: Rob Chadwick, Brian Empy, and Gale Rubenstein. Finance and commercial law: Dan Gormley. Pensions: Jana Steele and counsel Susan Rowland. (All are in Toronto.)
For General Motors of Canada Limited (Oshawa, Ontario)
Osler, Hoskin & Harcourt: Financing and real estate: Victoria Graham, Adrian Hartog, and Heather McKean. Insolvency and restructuring: Steven Golick, Tracy Sandler, and Marc Wasserman. Litigation: Lyndon Barnes and John MacDonald. Corporate: Steven Smith. Dealers: Andraya Frith.
For note holders of General Motors Nova Scotia Finance Company (Halifax)
Blake, Cassels & Graydon: Litigation: Jeff Galway. Restructuring and insolvency: Pamela Huff. Research/litigation: J.A. Prestage. Financial services: Nathan Chiefetz. (All are in Toronto.)
Cox & Palmer: Litigation: John Keith. (He is in Halifax.)
For Appaloosa Management L.P. (Chatham, New Jersey)
McCarthy Tétrault: Bankruptcy and restructuring: Kevin McElcheran. (He is in Toronto.) Appaloosa held Canadian-issued notes in GM.
For Chrysler Canada Inc. (Windsor, Ontario)
In-House: Vice president and general counsel–external affairs Lori Shalhoub. At Chrysler Group LLC: senior vice president and general counsel Holly Leese and vice president and chief tax counsel Paul Wolff.
McCarthy Tétrault: Tax: Thomas Akin, Douglas Cannon, Bernadette Dietrich, Patrick McCay, Brian Pel, Gabrielle Richards, James Warnock, John Yuan, and associates Elaine Jewitt-Matthen, Jeff Love, and Jeff Oldewening. Bankruptcy and restructuring: James Gage, Sylvain Vauclair, counsel James Farley, and associate Ryan Stabile. Corporate: Nancy Carroll, William Scott, David Tennant, and associate Jane Askeland. Labor and employment: Robert Macpherson and associates Gerald Griffiths and Brian Wasyliw. Banking: Richard Higa, Marc MacMullin, Dean Masse, and Robert Stephenson. Pensions: Gregory Winfield and associate James Fera. Litigation: Darryl Ferguson, Geoff Hall, and Christopher Hubbard. Research: Eric Gertner, counsel Hovsep Afarian, and associate Brandon Kain. Real property: Gordon Sato and associate Jonathan See. Trade: John Boscariol. (All are in Toronto except for Vauclair, who is in Montreal.) McCarthy has acted for Chrysler Canada since 2003.
For Fiat S.P.A. (Turin, Italy)
Davies Ward Phillips & Vineberg: Corporate finance and securities: Timothy Baron, Christian Gauthier, Kenneth Klassen, and Carol Pennycook. Tax: Christoher Anderson, Elie Roth, and Stephen Ruby. (They are in Toronto.)
SINOPEC/ADDAX
In its second Canadian deal in a year, China Petroleum and Chemical Corporation (Sinopec) agreed on June 24 to buy Addax Petroleum Corp. for $7.4 billion. Addax, which is listed on the Toronto Stock Exchange, produces about 140,000 barrels of oil a day, mostly from fields in west Africa. The acquisition is the largest foreign takeover yet by a Chinese company. It reflects a strategy by Chinese resource companies to expand their direct access to oil and gas assets in order to meet increasing domestic demand.
Sinopec, which is owned by the Chinese government, completed a $1.9 billion acquisition of Calgary-based Tanganyika Oil Company Ltd. last December. The Addax purchase is being made through a subsidiary, Sinopec International Petroleum Exploration and Production Corp.
CEO Jean Claude Gandur controls about 38 percent of Addax personally and through a holding company, Addax & Oryx Group. According to reports before the deal was announced, Gandur said he would resist an offer of less than $50 a share. Sinopec’s final offer is for $52.50 a share.
The deal is subject to certain approvals by the Chinese government.
For acquiror Sinopec International Petroleum Exploration and Production Corp. (Beijing)
In-House: Counsel Eugene Lu.
Stikeman Elliott: M&A: David Lefebvre, David Taniguchi, and associates Charlotte Feasby, Martin Mix, and Veronica Tang. Tax: Doug Richardson and asso-ciate Julie D’Avignon. Employment: Barbara Johnston. Competition: Susan Hutton. (All are in Calgary except for Hutton, who is in Ottawa.) Stikeman has represented Sinopec in Canada since 2006, and was originally referred to the company by Vinson & Elkins.
Vinson & Elkins: M&A: David Blumental, Paul Deemer, and associate Tju Liang Chua. (They are in Shanghai and Beijing.) The firm also represented Sinopec on the Tanganyika acquisition.
For target Addax Petroleum Corp. (Calgary and Geneva)
In-House: Chief legal officer David Codd and senior legal adviser Allison Neapole.
Fasken Martineau: M&A: Aaron Atkinson, Nigel Gordon, June Paddock, Richard Peters, Richard Steinberg, John Turner, and associates Tanner Helwig and Krisztian Toth. Competition: Huy Do. Tax: Mitchell Thaw. (All are in Toronto except for Gordon and Paddock, who are in London, and Peters and Helwig, who are in Calgary.) Fasken has advised Addax since its creation as a public company in 2006.
For Addax board of directors
Osler Hoskin & Harcourt: Corporate: Jeremy Fraiberg and Clay Horner. (They are in Toronto.)
For Addax & Oryx Group
In-House: General counsel Ioana Condacci.
Fraser Milner Casgrain: M&A: Toby Allan, William Jenkins, Miles Pittman, Dale Skinner, counsel Ralph Shay, and associate Justin Park. Tax: Anne Calverley and associate Sebastian Elawny. (All are in Calgary except for Shay and Park, who are in Toronto.)
VITERRA/ABB GRAIN
Viterra Inc., Canada’s largest grain handler, plans to boost its operations in the growing Asian market with a $1 billion takeover of Australia’s biggest agribusiness, ABB Grain Ltd.
The cash-and-stock deal, announced May 19, is Viterra’s first major acquisition since it was formed through the merger of Saskatchewan Wheat Pool and Agricore United in 2007. Viterra has operations in the United States, Japan, and Singapore and expects a 20 percent increase in demand for its core commodities in the next ten years.
Under the agreement, Vi-terra will acquire all of ABB’s issued and outstanding shares at a share price of between $7.05 and $7.28, depending on whether shareholders choose to take cash or fractional shares in Viterra. ABB—formerly the Australian Barley Board—will also pay a special dividend of 32 cents per share.
Australia’s Foreign Investment Review Board approved the acquisition on June 25, but the takeover still needs other regulatory, court, and shareholder approvals. ABB shareholders will vote on the deal in September. At least 50 percent of shareholders must participate in the vote, and the transaction must be approved by at least 75 percent of those who cast ballots.
For acquiror Viterra Inc. (Regina, Saskatchewan)
Torys: Corporate: Adam Armstrong, James Scarlett, Patrice Walch-Watson, and associates Graham Erion, Patricia Finkelstein, Alison Harnick, and Andrew Prodanyk. Lending: Nadine Rockman, Tom Zverina, and associate Nina Mansoori. Tax: Corrado Cardarelli. U.S. securities: Andrew Beck. (All are in Toronto except Beck, who is in New York.)
Freehills: Corporate: Philippa Stone.
For target ABB Grain Ltd. (Adelaide)
Stikeman Elliott: M&A: Brian Hansen, Simon Romano, Sean Vanderpol, and associates Alethea Au, Andrew Bozzato, and Anthony O’Brien. Tax: Susan Thomson. (All are in Toronto except for Hansen, who is in Sydney.)
Johnson Winter & Slattery: Corporate: Tim Bowley and John Keeves. Financing: Jim Hunwick.
