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138 Canada | Banking sation simplifies transaction teams and decreases the ever-important costs of staffing a file. The work produced by the model speaks for itself. Representing a syndicate consisting of RBC (Royal Bank of Canada), TD Bank (Toronto- Dominion Bank), Scotiabank, BMO (Bank of Montreal), CIBC (Canadian Imperial Bank of Commerce) and National Bank of Canada, McCarthy negotiated the underwriting agreements behind Manulife Financial’s December 2008 equity offering. Executed as a bought deal, the public offering raised $1 billion in tandem with a simultaneous $1.1 billion through a separate private placement. McCarthy also arranged $3 billion in lending facilities through the same syndicate for Manulife. As issuers’ counsel, McCarthy represented TD Bank in September 2008. Through the TD Capital Trust III, McCarthy engineered the issue of $1 billion in securities. Later in the year, the firm advised BMO in a highyield issuance worth C$450 million. Due in 2017, the notes provided Tier 1 capital for the bank at the height of the economic downturn. Leading lawyers Richard Balfour Jean Michel Deschamps Byran Gibson J Michael McIntosh Robert Metcalfe Barry Ryan For analysis of the other leading law firms in Canada’s capital markets please visit the website at www.iflr1000.com Bank lending Recommended firms Tier 1 Blake Cassels & Graydon McCarthy Tétrault Osler Hoskin & Harcourt Tier 2 Davies Ward Phillips & Vineberg Goodmans Stikeman Elliott Tier 3 Bennett Jones Borden Ladner Gervais Fasken Martineau Ogilvy Renault Torys Tier 4 Burnet Duckworth & Palmer Fraser Milner Casgrain Macleod Dixon McMillan www.iflr1000.com Financial services regulatory Recommended firms Tier 1 Blake Cassels & Graydon McCarthy Tétrault Osler Hoskin & Harcourt Torys Tier 2 Fasken Martineau Ogilvy Renault Stikeman Elliott Tier 3 Borden Ladner Gervais Fraser Milner Casgrain Goodmans The absence of subprime mortgage investment exposures and a history of conservative management have saved many Canadian financial institutions from the losses suffered in the US. But the contagions of fear and misperception still pose a hurdle, even in Canada. While transactional work has suffered, the need for regulatory advice remains consistent in the jurisdiction. “Banking has actually been a bright spot. Transactions are off across the board, but, fortunately, Canadian banks are relatively strong and can be acquirers,” says a partner. Following a flurry of recapitalisation transactions in the capital markets, many Canadian financial institutions now find themselves in an advantageous position. The question now is whether they will alter the business model that has prevented loss in order to improve post-recession market share. Banking and finance partners in Canada say they began noting the pullback of foreign financial institutions from the US and Europe as early as the spring of 2008. The speculation then, much as it is now, is whether Canada’s prominent investment banks and insurance companies will try to fill the void. “Who knows, it may be the rebound of the investment banks in Canada,” says one partner. “What we’ve seen previously is a gradual erosion of the Canadian investment banks to large American banks like JPMorgan, Bank of America, and Citi. Maybe since those guys are hiccupping at the moment, we’ll see the Canadian investment banks re-establish themselves.” This potential re-development of the domestic financial sector is already causing some ripples in the legal community as well. As the banks examine the events of the past year, and the legal advice they received, some Canadian counsel see a shake-up of the historic relationships that have come to define some firm’s finance departments. The prospect of any regulatory change in Canada is doubtful thanks to the financial sector’s limited subprime exposure. In fact, many see the Canadian system as a working model for the regulatory overhauls under discussion elsewhere in the world. This has allowed lawyers here a tempered optimism as firms find their corporate departments posting better-than-expected results through early 2009. “We essentially have been busier than ever in financial services, mainly because our clients and all the banks and insurance companies have been busy building capital,” says a partner. Blake Cassels & Graydon Blakes has engineered an enviable banking group, with a strong team that includes Kevin Fougere, Michael Harquail, Dawn Jetten and senior counsel James Christie. “I use Blakes exclusively,” says a client. “I use them for securities work and they’re very effective for that.” The firm’s client list includes a mix of foreign and domestic financial institutions, such as JPMorgan and the CIBC (Canadian Imperial Bank of Commerce). In fact, JPMorgan recently sought Blakes’ counsel in connection with their involvement in Teck Cominco’s acquisition of the Fording Canadian Coal Trust. Representing a syndicate led by JPMorgan, Blakes was able to construct a $4 billion senior term loan facility and a $5.8 billion senior bridge facility as part of an overall $14 billion financing package. The transaction was closed in October 2008. As part of the simultaneous rights offering and private placement of debentures for TimberWest Forest Corp, Blakes advised the arranger and syndicate negotiating changes to the issuer’s underlying credit facilities. Under Blakes’ counsel, the BMO Capital Markets and Rabobank Nederland-led syndicate amended TimberWest’s existing loan agreements, including the instalment of a new $250 million three-year revolving credit facility. Again in the forestry sector, the firm advised borrower Ainsworth Lumber on a recapitalisation programme in which Blakes negotiated the exchange of $824 million in debt for equity and $150 million in new unsecured notes. A new series of notes was also issued, equalling $200 million, and three credit facilities of equal worth were amended. Leading lawyers James Christie Martin Fingerhut Kevin Fougere Dan Fournier Michael Harquail Dawn Jetten 2010 EDITION
Mergers and acquisitions | Canada 139 McCarthy Tétrault McCarthy Tétrault is defined by its banking practice. Strong relationships with banks like BMO (Bank of Montreal), CIBC and Scotiabank give the firm a consistently dominant presence in the market. The fact that McCarthy represented BMO, CIBC, RBC (Royal Bank of Canada), Scotiabank and TD Bank (Toronto-Dominion Bank) through the restructuring of the asset-backed commercial paper (ABCP) market speaks volumes for its reputation. And given its strong track record with borrowers and lenders, it’s unsurprising McCarthy has been able to use its banking practice as a springboard for an equally reputable platform in project finance work. Barry Ryan is consistently mentioned by peers as the standout lawyer of the practice. McCarthy has made a practice out of representing syndicates of Canada’s financial institutions. Following a $2 billion equity offering by insurance provider Manulife Financial in which the firm represented a syndicate of underwriters including RBC, TD Bank, Scotiabank, BMO, CIBC and National Bank of Canada, McCarthy then negotiated the terms for a $3 billion 5-year term loan on behalf of the Big Six Canadian banks. In December 2008, McCarthy also advised BMO Nesbitt Burns and a syndicate of underwriters in separate debt and equity offerings for various investment arms of BMO. The first was a C$450 million ($408 million) issuance by BMO Capital Trust II in the form of Tier 1 notes due in 2017. A second offering, this time by BMO of common shares, was executed days later, with the 33 million shares earning C$1 billion for the bank. Leading lawyers Jean Michel Deschamps Byran Gibson J Michael McIntosh Robert Metcalfe Barry Ryan Osler Hoskin & Harcourt Peers offer praise of Osler’s corporate abilities, a strong reputation that also extends to the firm’s banking and regulatory groups. A longstanding relationship with RBC (the Royal Bank of Canada) benefits Osler across practice areas, and peers view the cultivation of that relationship by Michael Matheson as one of the keys to the firm’s continued success. For regulatory matters, clients and peers recommend John Jason as the firm’s star practitioner. “John Jason is the one that I work with almost all of the time. He’s very thorough,” says a client. From April 2009, Jason and Stephen Sigurdson have been retained by BMO’s lifeinsurance arm, BMO Life. The two are handling regulatory matters associated with BMO Life’s acquisition of AIG’s (the American International Group) Canadian life-insurance division – a deal estimated in value at $375 million. Also, in May 2008, Osler handled Canadian regulatory matters for JPMorgan in connection with the investment bank’s acquisition of Bear Stearns. The Osler banking team’s diversity of capabilities earns recognition from clients. “I inherited them as a firm doing work for my company, and I’ve been very happy with them,” says one. “We started a new entity in Canada and they were instrumental in getting that done. And we added a new product to an existing company and they’re assisting us on that type of thing as well. We actually use a number of firms, but I would say they are our biggest vendor in terms of the range of work we’re involved in.” Leading lawyers Richard Fullerton John Jason Etienne Massicotte Michael Matheson Frank Turner Stikeman Elliott The lawyers at Stikeman Elliott have built a diverse corporate practice that makes them competitive across the board. Clients of the M&A group return for counsel in capital markets and banking matters. This cultivation of longstanding relationships is evident in the feedback received from Stikeman clients. “We use them for all our general corporate transactions in Canada. They’re basically our lead counsel [there],” says a client. “I recommend them for everything. In particular, their assistance for transactions has been phenomenal. We wouldn’t get business done without them. They’re that good.” In connection with Jubilant Organosys’ acquisition of Draxis Health, Stikeman advised the ICICI Bank Canada as lead arranger and lender. The $255 million acquisition finance package was the first executed by ICICI since its move into the Canadian market from its native India. Stikeman also advised ABN Amro as lender in the acquisition of Ipsco’s Canadian pipeline manufacturing business by the Evraz Group. The $575 million financing was finalised in June 2008, allowing the Russian miner and steel manufacturer to consolidate its Canadian holdings. Leading lawyers Michael Allen Jean Lamothe Daphne MacKenzie Torys The return of Torys to the first tier in regulatory work reflects the market’s regard for Blair Keefe. Along with Sunny Sodhi, Keefe is advising the Home Equity Income Trust in regulatory aspects of its conversion to a corporation. As a result of an Ontario Superior Court ruling that ordered the conversion, the trust has restructured into a publicly-traded corporation in Canada. This process includes the removal of existing units held in the trust and their conversion to public shares, allowing the trust to emerge as a public bank under the name HomEquity Bank. In lending work, Torys advised Manulife Financial as the borrower of a five-year term loan totalling C$3 billion ($2.7 billion). Torys negotiated the facility with a syndicate of banks including CIBC, RBC, Scotiabank, BMO, National Bank of Canada and Toronto-Dominion Bank. The firm also advised AV Minerals in refinancing an existing $3 billion bridge facility with ABN Amro, Bank of America, and Citibank. The refinancing was achieved through a rights offering by the mining company in tandem with the establishment of a new $982 million term credit facility. Leading lawyers Adam Delean Michael Feldman Blair Keefe Jonathan Weisz For analysis of the other leading law firms in Canada’s bank lending and financial services regulatory market please visit the website at www.iflr1000.com Mergers and acquisitions Recommended firms Tier 1 Blake Cassels & Graydon Davies Ward Phillips & Vineberg Goodmans Osler Hoskin & Harcourt Stikeman Elliott Tier 2 Bennett Jones McCarthy Tétrault Ogilvy Renault Torys Tier 3 Borden Ladner Gervais Burnet Duckworth & Palmer Fasken Martineau Fraser Milner Casgrain Macleod Dixon 2010 EDITION www.iflr1000.com
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