Barrick, Fairfax Push Canadian Stock Sales to Decade High

By Doug Alexander

Sept. 10 (Bloomberg) -- Stocks sales in Canada surged to the highest in a decade this year after Barrick Gold Corp. and Fairfax Financial Holdings Ltd. led the biggest one-day sale of equity in Canadian history.

Barrick, the world’s largest gold producer, raised $3.5 billion selling common shares to unwind gold-price hedging contracts. Fairfax, the Canadian insurer, sold $1 billion in shares on Sept. 8 to finance an acquisition.

“It’s a very strong sign for the economy,” said Roman Dubczak, vice chairman and head of equity capital markets at CIBC World Markets, which led the Fairfax sale. “It’s quite positive for the economic environment if corporations are able to finance quite readily in equity and fixed-income markets.”

The stock sales this week add to $25.1 billion in new Canadian equity financings between January and August, on track for the highest nine-month total since at least 1999, when Bloomberg began collecting data. Canadian stock sales rose in the first half of the year as Royal Bank of Canada and other lenders sold more preferred shares.

“The rebound in the market is suggesting, rightly or wrongly, that there is a recovery coming,” said Paul Hand, managing director of equity capital markets at Royal Bank’s investment banking unit in Toronto.

A rally in Canadian stock prices is driving companies to sell common shares as well. The benchmark Standard & Poor’s/TSX Composite Index has risen 45 percent since its March 9 low, led by financial stocks. The S&P 500 jumped 53 percent since then.

New Issues

“Investors are putting a lot of their money back into equity markets and enjoying new issues,” CIBC’s Dubczak said. “A year ago the markets were quite shut down from an equity perspective, so there’s a catch-up as well.”

Canadian equity offerings fell 6.6 percent to $32.2 billion in 2008 from the previous year, as initial stock sales plunged 81 percent, according to Bloomberg data. The value of IPOs this year has already doubled, led by a C$500 million ($463 million) spinoff of an energy unit by Epcor Utilities Inc. of Edmonton, Alberta.

“Investors are evaluating opportunities to reposition portfolios and deploy cash, which has led to significant investor demand in North America and overseas,” said Kirby Gavelin, co-head of equity capital markets at RBC Capital Markets, which led the Barrick sale.

Paladin Energy Ltd., the Toronto-listed uranium producer, said Sept. 8 it would sell shares worth as much as 15 percent of its capital. Brookfield Properties Corp., owner of New York’s World Financial Center, raised $1.04 billion last month to refinance debt and make investments.

Osisko Mining

Other firms that sold shares this month included Osisko Mining Corp., which raised C$149.5 million. Silver Wheaton Corp. may offer as much as $287.5 million of stock to buy silver assets from Barrick. WestJet Airlines Ltd., the country’s second-biggest carrier, said yesterday it plans to raise as much as C$172.5 million.

Barrick’s stock sale may rise to $4 billion if the banks leading the sale unload additional shares to meet demand. The Barrick offering topped the C$3.19 billion sale of the federal government’s stake in Petro-Canada in September 2004, previously the largest in Canadian history. Barrick had originally planned to sell $3 billion in stock, and increased the sale to $3.5 billion yesterday.

Barrick’s sale “makes a lot of sense” to help them reduce hedging contracts, said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York, which owns the stock. “The fact that they increased it by another half a billion was an indication for the appetite in the market.”

A bank group led by RBC Capital Markets, Morgan Stanley, JP Morgan Securities and Scotia Capital will share $122.5 million from arranging the Barrick sale, based on a 3.5 percent fee, according to sale documents.

Beware of Rental Car Contracts and Gotchya Clauses

Read car-rental terms carefully to avoid extra costs TheStar.com - Business - Read car-rental terms carefully to avoid extra costs

September 05, 2009

Ellen Roseman

When renting a car, do you read the rental agreement carefully before driving off?

If not, pay heed to this story.

Jacqueline Boone, who lives in England, had an accident in a rented car while visiting Toronto in 2006. While driving out of an underground parking lot downtown, she swerved to avoid a head-on collision with a car coming down and hit a wall.

Boone called the company, Advantage Car & Truck Rentals, immediately to report the damage.

She believed she was protected from extra costs since she had paid $25 a day for a loss-damage waiver, which is supposed to cover repairs to a rental car in an accident.

But when she checked her credit card bill online, she found an extra $5,558 in costs for the transaction.

Advantage later wrote to say repair costs weren't covered because of a clause in its contract that excluded collisions with a stationary object – that is, a wall.

With her husband, Boone decided to fight Advantage in Ontario's small claims court. She found the forms online and prepared a case.

She said the car rental office near the airport was poorly lit in the evening when she arrived. It was virtually impossible to read the terms and conditions in the agreement. Also, the clause excluding collisions with stationary objects was never brought to her attention. She wasn't asked to initial it, as with other parts of the contract.

"Jackie asked the clerk whether we would be covered for everything with the loss-damage waiver that we purchased at an exorbitant rate. He said we would be," Robert Boone says.

In July 2008, Boone flew to Toronto for her day in court. She faced several lawyers on the other side. "My wife has no legal training, but with help from guidelines downloaded from the Attorney General's website, she put the case together and won it," her proud husband says.

She cited another case, Tilden Rent-A-Car vs. Clendenning, in which the contract denied coverage for accidents if the driver had consumed any alcohol.

Clendenning hit a pole after having consumed alcohol and pleaded guilty to impaired driving. He won in court when the rental company wouldn't pay for the damage.

In the Ontario court of appeal in 1978, Justice Charles Dubin said many standard-form contracts are signed without being read and understood.

A company seeking to rely on "stringent and onerous provisions" in a contract shouldn't be able to do so without having first taken reasonable measures to draw the terms to the other party's attention, he said.

Advantage launched an appeal, which was dismissed on June 2 of this year.

Superior court judge Andromache Karakatsanis said the small claims court judge had not made any errors.

In the circumstances of the case, a reasonable person would have known that Boone was not consenting to the exclusion, notwithstanding the clause in the written contract, she said.

"Advantage stands behind the facts and allegations made by it in the court proceedings, which are now a matter of public record," company spokesman Bruce Taylor says about the case.

The company was ordered to pay for the repair costs, plus $8,000 in court costs.

The Boones hired a lawyer for the appeal, so they're still out of pocket.

They hope to inspire others to fight against contracts with unfair terms.

"We are the kind of people who stand up for what they believe in and will not be bullied when we have been wronged," Boone says.

"I hope that a precedent has been set for all those who are wrongly treated by car rental firms to stand up and be counted."