Commodity and bank deals resurge

CDiscoveries ommodities and bank financings sprang to life in the second quarter of 2016, not only leading to the largest bought deal in Canadian history, but also triggering a rebound in deal flow from a slow first quarter.

Canadian law firms advised issuers on 121 debt and equity deals that raised a combined $39.97 billion for issuers during the second quarter of 2016, according to Financial Post data. That registered a hefty 66-percent jump in deal flow and an 11-per-cent increase in deal value from the first quarter of 2016. Measured against last year’s second quarter, Q2 2016 turned in a slight 3.2-per-cent decline in deal flow, but a 12.6-per-cent increase in deal value.

“Commodities seem to have gotten off the mat re- cently, with renewed activity in metals and oil and gas,” says Jeffrey Singer, a partner with Stikeman Elliott LLP in Toronto. “It’s nice to see the window open to commodity and resource issuers, bringing with it the possibility of opportunity.”

If there was a stand-out deal of the quarter, it would have to be TransCanada Corp.’s $4.42-billion offering of subscription receipts on April 1 to raise funds for its proposed US$13-billion takeover of Columbia Pipeline Group Inc. Subscription receipt offerings give investors the right to swap the receipts for common shares once a proposed deal is completed. The takeover ultimately closed on July 1. The offering was the largest equity deal of the quarter — and the largest bought deal in Canadian history.

Blake, Cassels & Graydon LLP represented the issuer on the TransCanada offering, while Norton Rose Fulbright Canada LLP was legal adviser for the underwriter.

“TransCanada is an illustration of, in effect, redefining the capacity of Canadian capital markets,” said Ross Bentley, a partner with Blakes in Calgary. “This was the largest equity bought deal ever done in any sector.”

Aside from its massive size, the deal was also notable in that it offered to keep the subscription receipts open for 12 months, in case the transaction was slow to receive regulatory approvals. The financing also offered investors dividend equivalent payments on the sub receipts in advance of their conversion to shares.

“Good management teams can still raise money in oil and gas markets. As long as they’re going after good assets, they’re basically able to buy assets from management teams that have underperformed,” says Andrew Parker, a partner with McCarthy Tétrault LLP’s business law group in Toronto.

Despite the size of the TransCanada deal, Osler, Hoskin & Harcourt LLP actually edged out Blakes for top spot in our marquee table, Canadian legal advisers to issuers on combined debt and equity transactions by deal value. Osler represented financial institution issuers on three massive debt transactions, including the biggest debt offering of the quarter: Bank of Nova Scotia’s $3.15-billion, crossborder bond offering, which closed on April 26.

The top five firms ranked by deal value as advisers to combined debt and equity issuers were Osler ($9.57 billion), followed by secondplace Blakes ($9.54 billion), then Norton Rose Fulbright ($5.48 billion), McCarthy ($4.57 billion) and Torys LLP ($2.29 billion).

Deal flow is arguably a better measure of the actual activity levels in the corporate finance practices of the big national business law firms. Blakes was the busiest firm by this measure, working on 10 deals during the quarter, followed by Norton Rose Fulbright, Torys and Calgary-based Burnet, Duckworth & Palmer LLP in a three-way tie with eight each, and Osler, McCarthy and Goodmans LLP in a three-way tie with seven.

Norton Rose Fulbright topped our deal value rankings for Canadian legal counsel to underwriters on both equity and debt offerings. The firm advised on deals worth a total of $6.42 billion. Stikeman, which advised on 24 deals for underwriters, was first by deal flow.

Osler claimed top spot for both deal value and deal flow in advising debt issuers on five deals that raised a total $7.57 billion.

McCarthy topped our table of advisers to underwriters on debt financings by deal value. It advised underwriters on deals that raised a combined $3.55 billion. Stikeman was first in terms of deal flow, working on four deals.

Blakes ranks first on our table of advisers to equity issuers in terms of both deal value and deal flow. It worked on nine deals that raised a whopping $8.53 billion. Besides the TransCanada deal, it also worked on the second-biggest equity deal of the quarter, Suncor Energy Inc.’s $2.88-billion common share offering.

Norton Rose Fulbright topped our table of advisers to equity underwriters as ranked by deal value, advising on deals that raised a combined $5.41 billion. Stikeman was first in terms of deal flow, advising underwriters on 20 deals. settlement on the grounds Tremblay had breached the mediation’s confidentiality clause. When Tremblay attempted to collect, it was decided that she had breached the minutes of the settlement, as her posts made it clear money was paid out to her. In the end, the HRTO ordered Tremblay’s employer to pay out the settlement, but reduced it by $1,000 due to her breach of the agreement.

A settlement doesn’t end once you sign on the dotted line. The terms could last years, decades, even the employee’s lifetime. Non-disclosure and confidentiality clauses should not be taken lightly. As an employee, it is important to understand the terms you are agreeing to in exchange for a settlement. Some terms could be onerous.

For an employer, a nondisclosure clause can be crucial. If other employees learn you just paid off their colleague, the door you swore you had just nailed shut will later be revolving.

However, where a settlement is minimal, I often dissuade employer clients from inserting confidentiality clauses. In such cases, employers want the improvident terms the employee settled for to circulate to discourage litigation. And if the settlement is paltry but there is a confidentiality clause, your problems could boomerang as the employee whispers to former colleagues that, much as she would love to extol the amount she received, it was so much that the employer bound her to confidentiality.