Topic: Finance

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Debt, equity and tax credits: how films are financed

The other day I cued up a new release movie that I had been eagerly anticipating. As the opening credits rolled, I couldn’t believe how many entities were being credited. The list kept going and going, with a range of what appeared to be both governmental and private organizations. What could these organizations all have … Continue reading

Distressed debt investing: the basics

Whether it’s the tightening of the credit markets, a regulatory shift, margin erosion due to influx of competition, or structural changes such as in the retail industry as of late: there are plenty of reasons that get companies into deep water and create opportunities for distressed debt investing in Canada. The more difficult question is … Continue reading

Crypto update: January crash, securitized tokens and threats to traditional VC

Bloodbath in the CryptoMarket For the past three years in January, Bitcoin experienced significant price corrections. This year is no different – except for its magnitude. Likely exacerbated by an influx of new investors and a spike in actively traded altcoins, Bitcoin depreciated by almost 50% from its all-time high in mid-December. According to CoinMarketCap, … Continue reading

Maintaining perfection post-closing

In a secured financing transaction, such as acquisition financing, a creditor would often protect its interest by creating, attaching and perfecting a security interest by registration in the personal property of the debtor or the guarantor. Once a deal closes, secured creditors would often forget to monitor their registrations to maintain perfection. Post-closing events such … Continue reading

How are market participants dealing with the retirement of Libor?

Earlier this year I wrote about the Financial Conduct Authority’s (FCA) announcement in July of its plan to phase-out the London Interbank Offered Rate (Libor), the interest rate benchmark used to set payments on more than $350 trillion in financial contracts such interest-rate derivatives, corporate bonds, mortgage loans and more. The FCA’s intention is to … Continue reading

The interesting thing about M&A is…

Many predicted that 2017 would be another record year for Canadian mergers and acquisitions (M&A). There are also currently some predictions that interest rates will continue to rise despite the recent announcement of a contraction in the economy. In this blog post we consider these two factors. As depicted in Figure 1 below, while 2017 … Continue reading

How can the crowd fund you?

Crowdfunding is a great way for businesses to raise a small amount of money from a large group of people to help fund a new business venture. However, businesses who use crowdfunding to raise capital by issuing securities in exchange for the money raised need to make sure they are not violating any securities laws … Continue reading

Rising retail bankruptcies present ample opportunity for distressed investors

The recent giant retail bankruptcy filings by Toys ‘R’ Us and Sears Canada are not standalone cases in the retail sector. According to the recent Quarterly Report Of Business Bankruptcy Filings, in 2016, the United States experienced a year-on-year increase of 26% in the number of retail company bankruptcy filings. The sector generated 15.77% of … Continue reading

Libor retirement and implications for contracts tied to it

The London Interbank Offered Rate (Libor), the interest rate benchmark used to calculate interest rates on short-term loans by many large banks, will be phased out after 2021 according to its regulator. The London based Financial Conduct Authority (FCA) recently announced that due to growing concerns regarding the long term sustainability of the benchmark, which … Continue reading

An update on the use of reverse breakup fees in M&A deals

The 2007-2008 financial crisis saw reverse breakup fees emerge as part of a new structure of private equity in the United States. The use of reverse breakup fees quickly spread thereafter, and by 2010-2011, approximately one-third of M&A deals in Canada included reverse breakup fees. These fees serve to discourage bidders from walking away from … Continue reading

Picking it up for a song: deal considerations when purchasing a distressed business

Although a growing body of evidence—from job numbers to stock price figures—suggests that the Canadian economy is set for strong growth this year, there will always be companies (and industries) that get left behind for one reason or another. Where those companies that cannot meet their obligations have otherwise attractive assets, it presents an opportunity … Continue reading

True sales: a refresher

Securitization remains an important tool for companies to realize value from future payment streams and raise financing, typically at a better cost of funds than the interest expense associated with a corporate loan or bond. While there are many different ways to structure a securitization transaction, it is of paramount importance to isolate the relevant … Continue reading

Distressing prospects for distressed debt?

According to a Debtwire report released this month, the North American distressed debt market will be characterized by continued volatility throughout 2017, with the oil & gas sector presenting the most attractive opportunity for investors. Financial services, industrials and real estate were also identified in the report as being ripe for investment in the coming … Continue reading

M&A transactions between fintech companies and traditional banks

Financial technology (fintech) companies like Square, Wealthsimple and Mint are already having disruptive effects in their respective industries, changing the way Canadians pay for goods and services, invest their savings, and manage their finances. A recent survey shows that Canadians are becoming less dependent on traditional banks given the variety of options to self-manage their … Continue reading

Tighter credit may turn cross-border M&A into popular growth strategy for private companies

South of the Canadian border, regulatory oversight and scrutiny continues to play a noticeable role in making it more difficult for private companies to raise capital through bank loans. In this climate, could strategic cross-border M&A become a more popular growth strategy for US companies which are unable to access traditional lenders and are unsure … Continue reading

Bitcoin update: cryptocurrency remains rare in M&A transactions despite potential

Bitcoin remains a fringe currency in the context of M&A transactions. Despite some notable advantages over fiat currency, the risks associated with funding a large transaction using the cryptocurrency have limited its use to deals between players in the Bitcoin space. This article provides an update to our previous article on Bitcoin’s viability as a … Continue reading

Taking stock of SPACs

While the CPC program has existed for a number of years under the TSXV and Special Purpose Acquisition Companies (SPACs) have long been a feature of American capital markets, as we alerted in October of last year, SPACs are a relatively new arrival in Canada, with the first Canadian SPAC created in April 2015. The … Continue reading

Money makes the world go ‘round: lender protections in leveraged acquisitions

With Canadian prime and US federal interest rates maintaining an all-time low since the 1980s, the current market is well-positioned for leveraged acquisitions. Whether a purchaser does not have the liquidity to acquire a business or believes the potential growth of the investment will outpace any interest accumulating, the use of borrowed money to purchase … Continue reading

Financing with non-bank lenders

Non-bank lenders are increasing their market presence in both acquisition financing and the provision of financial solutions for ongoing operations, including in the asset-based lending context.  The increased presence of non-bank lenders seems to be driven by both the benefits of working with providers of non-regulated alternative capital source funding and the regulatory limitations faced … Continue reading

What Basel III means for escrow management

Following the financial crisis of 2008, harsher regulations governing financial institutions were implemented to mitigate future economic recessions. As discussed in an article by the Canadian Bankers Association, new financial regulations, such as Basel III, have targeted capital and liquidity because both affect a bank’s ability to “cushion the blow” of any losses and maintain … Continue reading

Weak loonie, no problem for Canadian institutional investors

2015 was not the kindest to the Canadian dollar as it saw its value depreciate by 15% when compared with the U.S. dollar. Despite the weakening Canadian dollar, Canadian companies remained undeterred in their pursuit of foreign acquisitions. According to a recent Bloomberg study, in 2015, Canadian companies acquired $205 billion worth of assets, almost … Continue reading