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136 Canada | Capital markets ments otherwise prescribed by the TSX rules and Multilateral Instrument 61-101. The exemption provides relief from the requirement for valuations and shareholder approval for certain related party financings where the issuer is in serious financial difficulty. Conclusion Securities regulators in Canada have demonstrated a willingness to more actively engage in market oversight. As new capital markets structures and practices continue to emerge in response to market volatility, such active oversight is expected to continue. Capital markets Recommended firms Tier 1 Davies Ward Phillips & Vineberg Osler Hoskin & Harcourt Stikeman Elliott Torys Tier 2 Blake Cassels & Graydon Goodmans McCarthy Tétrault Tier 3 Bennett Jones Borden Ladner Gervais Fasken Martineau Ogilvy Renault Tier 4 Cassels Brock Fraser Milner Casgrain McMillan Conservative investment strategies saved much of the country’s financial community from the substantial losses suffered elsewhere in the world. “We’re not recession-proof. I think we’re recession-resistant,” is how one lawyer describes Canada’s present economic health. And while most capital markets departments in the US were starved for deal flow, Canadian firms received a lower but consistent pipeline of transactions to keep them busy. The capital markets have remained open for Canadian financial institutions and commodities issuers in particular. The defensive investments made in gold through the fall of 2008, during the freefall of market paranoia, exhibits that sector’s ability to sustain activity as well. “It was not nearly as deep a recession as we feared. There was more activity in traditional areas than we might have expected,” www.iflr1000.com comments one partner. That activity does not include IPOs, however, as the Canadian market has witnessed a virtual halt in initial public offerings along with the rest of the world. Recapitalisation is the foremost concern of Canadian banks. With their lending capabilities contracting considerably in the last year, financial institutions took advantage of market appetite for common stock and mediumterm note offerings throughout the year. CIBC (Canadian Imperial Bank of Commerce), RBC (Royal Bank of Canada) and Scotiabank are only a handful of the institutions restoring their balance sheets through such transactions. But despite this flurry of activity, Canada’s financial law firms were forced to rely on a broader base of issuer clients than in the past. Several lawyers emphasised the importance of mid-market clients because of their consistent activity in any market. Risk aversion has led to the renewed popularity of the bought deal structure for issuers. Developed nearly two decades ago as what lawyers describe as a defensive tactic against foreign investment banks, the entire issuance is pre-sold to an underwriter before being marketed to syndicated investors. Offerings for Manulife Financial and the Canadian miner Cameco, two of the largest in the market this year, operated on the bought deal model. Canadian issuers operating bought deals have also led a resurgence of the MJDS (multijurisdictional disclosure system) with the US, allowing issuers to pre-emptively file for SEC approval before the transaction occurs. Davies Ward Phillips & Vineberg Capital markets work has long been a specialty at Davies Ward. The firm consistently finds a role in complex transactions inside and outside Canada, thanks to the established practices of lawyers like Shawn McReynolds, Patricia Olasker and Carol Pennycook. Their reputations for high-quality representation have afforded Davies Ward the luxury of a sprawling client base that ranges from institutional clients to insurance providers to commodities companies. “I think they’re a fabulous firm. Pure excellence. I rank them as one of the best firms I’ve ever run across. They have a good operating model with a high ratio of partners,” says a client. Even in years of decreased activity you can expect to see the firm’s fingerprint at the top end of the market – like its representation of ING Group in that company’s C$2.16 billion ($1.9 billion) secondary offering. The offering was staged to shed ING Group’s 70% stake in ING Canada through a syndicate of underwriters including CIBC and TD Securities. A simultaneous private placement was executed through lead co-agents CIBC World Markets and Goldman Sachs to complete the sale of ING’s stake. A public offering for Rogers Communications found the firm again acting for the issuer in August 2008. Offered in the US, the two-tiered issuance of debt securities consisted of $1.4 billion in ten-year notes and an additional $350 million in 30-year notes. Davies Ward served as Canadian counsel in the $1.75 billion transaction. Davies Ward has also made inroads in the infrastructure sector of late. Mandates through the firm’s project finance platform have also resulted in follow-on work for the capital markets department this year. Carol Pennycook and Sonny Bhalla advised Infrastructure Ontario in a $300 million private placement of bonds due in 2013 to a syndicate led by TD Securities. Funds raised through the sale will go towards public infrastructure development projects throughout Ontario. Leading lawyers Shawn McReynolds Patricia Olasker Carol Pennycook Osler Hoskin & Harcourt The broader corporate practice at Osler offers a carryover of issuer and underwriting work for the firm’s capital markets group. Longstanding institutional clients like the BMO (Bank of Montreal) and RBC are combined with the diversity of issuer-side clients such as mining companies Cameco and Kinross Gold Corporation. When asked about Osler’s standing in the market, one peer remarks: “I absolutely think Osler is a top-tier firm without a doubt.” Several peers also recommend the counsel of John Macfarlane and Desmond Lee, denoting the two as clear leaders of the practice. Operating in tandem between its Toronto and New York offices, Osler advised Cameco in its issuance of nearly 30,000 common shares in March 2009. Sold in a bought deal to a syndicate led by BMO Nesbitt Burns and RBC Dominion Securities, Cameco was able to sell an additional 3,400 shares through the exercise of an over-allotment option in the underwriting agreement. All told, the offering raised $460 million for Cameco. Osler also showed its expertise in the highyield market this year by representing the syndicate of underwriters for the $1.75 billion note offering by Rogers Communications. The public offering was issued in two tranches of ten-year 6.8% notes and 30-year 7.5% notes. The cross-border nature of the offering 2010 EDITION
Capital markets | Canada 137 also exhibited Osler’s abilities to navigate the MJDS (multijurisdictional disclosure system) agreement with the US. Leading lawyers Desmond Lee John Macfarlane Stikeman Elliott The overall strength of Stikeman Elliott’s corporate group, particularly in the areas of banking and M&A, has brought the firm a broad swath of issuer and underwriting representations. Another year under the direction of Mihkel Voore as co-chair of the firm’s securities law group and head of corporate finance in Toronto has proved a seamless continuation of the firm’s capital markets work. Stikeman Elliott served as Canadian counsel to returning client TransCanada Corporation and its subsidiary, TransCanada Pipelines, in three separate cross-border debt and equity offerings from August 2008 through January 2009. Stikeman lawyers have quickly become experts at the use of the MJDS (multijurisdictional disclosure system) system to access capital markets in the US and applied that expertise in the transactions. Securing pre-approval for issuances in the US through MJDS, the firm issued debt securities for $1.5 billion and $2 billion for TransCanada Pipelines. An equity issuance of common shares equalling $1.16 billion was also executed through the same MJDS process in November 2008. Stikeman Elliott also scored roles advising underwriting syndicates in two of the biggest offerings this year. First, in the largest share issuance by a domestic bank through 2008, the firm represented a syndicate led by RBC Dominion Securities for the $2.3 billion issue of common stock by RBC. Stikeman Elliott then advised the underwriters and agents running the syndicate for ING Canada’s $2.16 billion secondary offering and private placement in February 2009. Leading lawyers Marc Barbeau Neville McClure Christopher Nixon Jeffrey Singer Mihkel Voore Torys The capital markets team at Torys has undergone a reshuffling of senior talent in the last year. The departure of Geoffrey Creighton to IMG Financial Group was offset by the hiring of two Ogilvy Renault partners, Charles Keizer and Valerie Helbronner, as well as by the addition of Daniel Raglan. But for all the movement of personnel, Torys maintained its top-tier ranking for another year through strong issuer representations like Manulife Financial and Eagle Credit Card Trust, in addition to performances for its standard list of underwriting clients. Manulife Financial hired Torys as issuer’s counsel to engineer the issuance and private placement of C$2.3 billion ($2.1 billion) in common shares. The syndicate underwriting the transaction included all Big Six Canadian banks. Similarly, Eagle Credit Card Trust retained the firm to develop and initiate its recent C$1.5 billion note programme. Torys designed the issuance to draw its value from a pool of credit card receivables co-owned by Eagle and President’s Choice Bank. Underwriting representations for Torys included the syndicate for Scotiabank’s C$1 billion domestic debt offering in April 2009. Following their sale to a syndicate that included Scotia Capital, TD Securities, RBC Dominion Securities, HSBC Securities and Merrill Lynch Canada, proceeds from the tenyear notes were used to bolster the bank’s Tier 2 capital. “They’ve endeavoured to stay in touch. They’re responsive. They’re a large firm that does have a presence in the US and can leverage that when required,” says a client. “Of the Canadian firms, they are better at trying to identify business opportunities.” Leading lawyers Kevin Morris Karrin Powys-Lybbe Blake Cassels & Graydon A strong lending practice benefits the capital markets partners at Blakes through a host of financial institutions already familiar with the firm. One peer says that “Blakes has traditionally had a strong relationship with CIBC (Canadian Imperial Bank of Commerce),” going on to note the increasing quality of the work that the firm has turned out. In March 2009, Blakes represented CIBC Capital Trust as the issuer of $1.6 billion in debt. The transaction was aimed at reinforcing the bank’s Tier 1 capital. “I’ve been using them for probably five years ... primarily for securities-related work. I think they’re very responsive, very creative,” says a client. Blakes advised the underwriters for the C$511 million ($464 million) cross-border equity offering by Canadian Pacific Railway. Included in the syndicate were Scotia Capital, RBC Dominion Securities and Morgan Stanley of Canada. The firm also served as Canadian counsel to Bank of America on its $10 billion common stock issuance in October 2008. Another mandate for Blakes was representing CIBC World Markets as co-leader with Goldman Sachs Canada of an underwriting syndicate for an equity offering for Pan- American Silver Corp. The February 2009 common share issuance raised $103 million for the mining company. One client singles out Ernest McNee for his talents, saying: “I find him very effective and very responsive.” Leading lawyers Frank Arnone Pat Finnerty Brock Gibson Ernest McNee Peter O’Callaghan Goodmans Goodmans maintains a reputation for quality capital markets work despite its smaller size when compared to rivals. Much of this reputation can be attributed to the senior talent the firm has amassed over the years. Stephen Halperin and Jonathan Lampe, co-heads of the firm’s corporate and securities group, along with Stephen Pincus who handles REIT (real estate investment trust) work, receive high praise from competitors. In February 2009, Lampe and Neill May were hired by Newmont Mining for a dual offering of debt and equity worth $1.7 billion. Issuing common stock and convertible senior notes due in 2012, Newmont’s fresh capital allowed the mining company to finance its acquisition of the AngloGold Ashanti stake in the Boddington mine of Australia. When Omers Realty announced its upcoming issuance of AAA debt in May 2008, Goodmans was hired to advise the syndicate of underwriters and agents for the transaction. The private placement was executed in two stages, classifying $400 million of Series C notes and $200 million of Series D notes that were subsequently sold to the RBC Dominion Securities-led investor group. Leading lawyers Stephen Halperin Jonathan Lampe Neill May Stephen Pincus McCarthy Tétrault The close relationships established between McCarthy Tétrault and its Canadian lending clients allow for a high amount of crossover work in the capital markets. The close-knit structure of the corporate finance group also gives added benefit to clients through a group of partners knowledgeable across varying transaction types and practices. This model of organi- 2010 EDITION www.iflr1000.com
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