The Globe and Mail - 02.11.2019

THE TORONTOREGION

BOARDOFTRADE

FARAHMOHAMED

The Toronto Region Board of

Trade is pleased to announce

the appointment of Farah

Mohamed in the new role of

Senior Vice President, Strategic

Initiatives, Policy & Public

Affairs.

Farah brings extensive

experience in strategic

partnerships. She will lead

the Board’s policy & public

affairs functions and its

expanded focus on issues and

opportunities for the economic

growth of the region, linked

closely to member needs.

Prior to joining the Board,

Farah was CEO of the Malala

Fund, where she led an

international team to deliver

on the organization’s goals in

collaborations with private and

public sector partners. Farah

was recognized at the Public

Policy Forum’s Testimonial

Dinner and Awards 2019 for

outstanding contributions to

the public policy and good

governance.

AboutTorontoRegion

BoardofTrade

The Toronto Region Board of

Trade is one of the largest and

most influential chambers of

commerce in North America.

We act as catalysts to make

Toronto one of the most

competitive and sought-after

business regions in the world,

which starts with the success

of our members. Learn more

at bot.com and follow us at

@TorontoRBOT.

bot.com

B2| REPORTONBUSINESS OTHEGLOBEANDMAIL | SATURDAY, NOVEMBER 2, 2019

The gift:Raising $46,000

The cause:the Canadian Cancer
Society

W

hen Sacha Hayward was
diagnosed with breast
cancer last year, she felt
stunned and helpless.
“You never think it’s going to be
you,” Ms. Hayward recalled from
her home in Toronto. “It’s one of
those things where if it can hap-
pen to me, it can happen to any-
one.” After the diagnosis in Sep-
tember, 2018, she went through
surgery, radiation and months of
treatment, which still continue.
This fall, she suggested to her
husband, Jonathan Pollock, and
their two sons – Max and Charlie –
that they participate in the Run
for the Cure, an annual fundrais-
ing event that raises money for
the Canadian Cancer Society.
“The Run for the Cure didn’t nec-
essarily have a meaning to me be-
fore all of this came into our
world,” she said.
The run was on Oct. 6 and the
family had hoped to raise $5,000.
They collected $46,000 and were
joined in the event by 45 friends
and family members. Ms. Hay-
ward isn’t a runner, so the family
walked the five-kilometre dis-
tance, and they plan to be back
again next year. “No matter what I
am able to raise, the goal is to just
continue to be able to contribute
to research,” she said.

[email protected]

Runningto

supportcancer

research

ThedonorsSacha

Hayward,Jonathan

Pollock,MaxPollock

andCharliePollock

PAUL WALDIE

GIVINGBACK

That has helped them hold the line on

fees by bringing in more U.S.-based work.

The total value of financings raised by

companies on the TSX and TSX Venture

exchanges fell from $61.6-billion in 2014 to

$32.6-billion in the first 11 months of the

2019 bank fiscal year, according to data

from Bank of Nova Scotia. But over that

same span, underwriting and advisory

fees collected by Canada’s six biggest

banks held relatively steady, at $4.6-billion

or higher in most years.

“For both the bank-owned dealers and

the boutiques in Canada, the commodity

super-cycle provided a home-field advan-

tage with respect to capital markets reve-

nue for a number of years,” said Sumit

Malhotra, a financial services analyst at

Scotia Capital Inc. “Accordingly, the re-

duced level of investor appetite for mining

and energy equities has clearly weighed

on new issue activity domestically, and

forced the investment banks to diversify

from both a geographical and sectoral per-

spective.”

There is no certainty that Encana’s long-

held relationships with Canadian banks

will diminish simply because of a change

of address. Encana’s finance department

will stay in Calgary, the company still has

investments in Canadian resources, such

as the Duvernay gas deposits, and will still

be subject to Canadian rules and regula-

tions for those operations. The company

works with about 20 banks inside and out-

side Canada, and there are “no changes ex-

pected,” spokeswoman Cindy Hassler said

in an e-mail.

But some things will change for the

banks. Work that was once done in Calgary

may shift to Houston or New York. And

Canadian banks could find themselves

playing less-prominent roles in underwrit-

ing syndicates if Encana gravitates toward

U.S. and global banks.

“If the service firms don’t follow them,

they’ll find local service firms to work

with. That’s going to be true of lawyers, ad-

vertisers, financial-services firms,” said

Will Mitchell, professor of strategic man-

agement at the University of Toronto’s

Rotman School of Management. “Because

those are really heavily based on personal

relationships.”

For lawyers doing work for Encana and

other energy companies shifting their fo-

cus to the U.S., the impact could be a more

Banks that could count on steady streams

of fees from energy-sector clients such as

Encana have spent the past several years

building up their U.S. offices to follow a

trail of advisory and underwriting work

that is increasingly won south of the bor-

der.

When Encana announced its move

Thursday, it sent an especially strong sig-

nal. It already had an American CEO living

in the U.S., where the company was mak-

ing most of its capital investment and ma-

jor acquisitions. Even so, it is rare for a ma-

jor Canadian energy company to take the

ultimate step of legally moving to the U.S.

And it comes at a tense political moment

in Canada, after a bitter election campaign

exposed serious fault lines between Alber-

ta and Ottawa.

“This is just more bad news in the story

we’ve been living and breathing in Calgary

over the past several years and is reflective

of the bigger picture in the Canadian oil

and gas industry,” said Stephanie Stimp-

son, a partner in the Calgary office of law

firm Torys LLP.

Negative investor sentiment has meant

almost no capital has been raised in recent

years, Ms. Stimpson said, translating into

less work for legal and financial advisers.

In the pioneering years of the develop-

ment of Alberta’s oil sands, investment

banks and law firms built teams in Calgary

to supply capital for multibillion-dollar

projects, and many Canadian investment

dealers opened offices in Houston and

Denver to serve U.S. energy companies.

But the dynamics of Alberta’s energy mar-

ket turned upside down in 2014, when oil

and natural-gas prices slumped and for-

eign players such as Royal Dutch Shell PLC

and Kinder Morgan Inc. began selling oil

sands assets and Canadian energy infras-

tructure.

Mergers and acquisitions and under-

writing activity declined sharply, and

many domestic and foreign players

trimmed their Calgary ranks. As clients

pivoted to fracking for shale gas in the U.S.,

for instance, banks responded by hiring

more bankers in cities such as Houston to

stickhandle energy deals aimed at U.S. in-

vestors. The banks also pushed invest-

ment and commercial bankers to adopt a

more cross-border mindset.

gradual loss of lucrative corporate law

work. Encana is currently listed on both

the New York and Toronto stock ex-

changes, meaning it already has securities

filings obligations in both countries. How-

ever, lawyers say that once the company is

incorporated in the U.S., that will change

its corporategovernance obligations – in-

cluding fiduciary duties for its board mem-

bers and management – and will likely re-

quire advice from lawyers with experience

in the relevant U.S. jurisdiction.

For external legal counsel on many re-

cent transactions, Encana has used Blake,

Cassels & Graydon LLP as its Canadian ad-

viser and Paul, Weiss, Rifkind, Wharton &

Garrison LLP in the U.S.

When a head office leaves Canada, “it

has broad ripple effects,” according to Ms.

Stimpson of Torys.

“For the redomiciled U.S. parent compa-

ny, that will be the location of the promi-

nent corporate, securities and advisory

work,” she said. “Canada won’t be elimi-

nated from the mix, as they will still re-

quire Canadian counsel for their Canadian

assets and their TSX listing, but the Cana-

dian role will be diminished.”

In raw financial terms, the business at

stake is not immaterial. Since 2013, Encana

has completed transactions – such as ac-

quisitions, or issuing equity or bonds –

with a combined value of US$28.4-billion,

including acquired debt and liabilities, ac-

cording to data from Refinitiv. Banks

around the world, including those in Can-

ada, don’t disclose the fees they collected

on those 48 deals, but Refinitiv estimates

they amounted to nearly US$400-million.

Swiss-based bank Credit Suisse has long

had one of the strongest relationships with

Encana, and U.S. giant JPMorgan Chase &

Co. has been playing an increasingly prom-

inent role in the company’s transactions in

recent years. But Canadian banks have

been among the largest beneficiaries of En-

cana’s fees: RBC Dominion Securities Inc.,

CIBC World Markets Inc. and TD Securities

Inc. are each estimated to have collected

more than US$50-million in fees over the

seven-year span, according to Refinitiv.

Scotia Capital Inc. and BMO Nesbitt Burns

Inc. also claimed fees worth an estimated

US$46-million and US$33-million, respec-

tively.

WithreportsfromEmmaGraneyinCalgary

Encana is shifting its headquarters to the United States from Calgary, seen above on Friday.JEFFMCINTOSH/THECANADIANPRESS

ncanaaShifttoU.S.israremoveamongCanadianenergyfirms

FROM B1

Encana Corp.’splan to designate the U.S. its

legal home will see the Canadian oil and

gas company relocate to Delaware, but only

on paper.

The company will list Denver as its pri-

mary place of business, Encana communi-

cations director Cindy Hassler said Friday,

and will retain its other offices in Calgary

and in Woodlands, Tex., a suburb of Hous-

ton.

Ms. Hassler reiterated Friday the move

will result in no job losses, with executives

and employees to remain in their home of-

fices.

“No one will be moving and no jobs will

be moving. Everyone remains in place

where they are today,” she told The Globe

and Mail in an e-mail.

Thursday’s news that Encana will re-

domicile to the U.S. didn’t shock Victor Do-

dig, president and chief executive of the

Canadian Imperial Bank of Commerce.

“I’m not surprised by anything nowa-

days. I just keep rolling with the punches.

Every company can make their own deci-

sions,” he told media after an Economics

Club of Canada luncheon in Calgary on Fri-

day.

While he didn’t go as far Alex Pourbaix,

president and CEO of Cenovus Energy Inc.,

who called the move a “tragedy for Cana-

da,” Mr. Dodig said every decision by a com-

pany to move out of the country is a set-

back for Canada and its economy.

“What we need to do is nurture the re-

tention of great companies that want to

compete in Canada, and work really hard to

attract many other companies who should

have their home office in

Canada,” he said.

“What we need to do is try

to start changing the dynam-

ics that Canada is open for

business. Every fact that we

can point to as a business

community or as a govern-

ment or as Canadians that

Canada is open for business

is a good one.”

In part, that means getting

the Trans Mountain pipeline

expansion done and back in-

to private hands, he said.

Mr. Dodig told the Eco-

nomics Club that Encana’s

move underscored the urgency with which

Canada must take action to further develop

its responsible energy industry.

“Canada’s competitiveness in the future

relies on us getting a number of things

right, but none of this will be possible if we

don’t take care of our energy sector we have

today,” he said.

Encana’s decision is the latest in a series

of foreign oil and gas company departures

from Canada. Royal Dutch Shell, Conoco-

Phillips and Devon Energy Corp. have all

sold their Canadian assets or scaled back

investments because of delays on Trans

Mountain and the resulting oil-price pres-

sures.

The company is also changing its name

to Ovintiv Inc., which CEO Doug Suttles

said Thursday would help break the com-

pany from the perception it primarily deals

in natural gas. The plan is for Ovintiv to

trade on the Toronto and New

York stock exchanges under

the ticker symbol OVV.

Encana’s move to the Unit-

ed States is dependent on a

shareholder vote, slated for

early 2020. It also needs stock-

exchange and court approval,

but requires no specific gov-

ernment approval.

If the changes get the green

light, shareholders will re-

ceive one share of common

stock of the new company for

every five shares of Encana.

More information is ex-

pected next week in the com-

pany’s application to regulators for approv-

al of the change.

According to the Delaware State Depart-

ment, more than one million corporate en-

tities call Delaware home, including 60 per

cent of Fortune 500 companies.

ENCANA (ECA)

CLOSE:$5.44,UP28¢

ncanawilllisteníerasprimary

placeofQusinessbcompanysays

CIBCheadsaysoilandgas

firm’sdecisiontolegally

relocatetotheU.S.shows

thatCanadaneedstoensure

it’s‘openforbusiness’

EMMA GRANEY

I’mnotsurprisedby

anythingnowadays.

Ijustkeeprolling

withthepunches.

Everycompanycan

maketheirown

decisions.

VICTOR DODIG

PRESIDENTANDCEO

OFCIBC