The Globe and Mail - 11.09.2019

JAMESRICHARDSON&SONS,LIMITED

Carolyn A. Hursh, Chairman of James Richardson & Sons, Limited, is

pleased to announce the election of Daniel R. Hursh and Bryden R.

Richardson to the JRSL Board of Directors.

Mr. Hursh is Vice President and General Counsel of True North

Sports + Entertainment, overseeing and advising on all legal matters

pertaining to TNSE and its professional hockey clubs, venues and

foundation. Before joining TNSE in 2011, he practiced civil litigation

with Miller Thomson LLP. Mr. Hursh, who currently serves on the

board of Assiniboine Park Conservancy, holds a Bachelor of Laws

degree from the University of Calgary, a Bachelor of Arts degree from

Princeton University, and the ICD.D designation from the Institute of

Corporate Directors in Canada.

Mr. Richardson is Chairman and CEO of TriggerTech, the preferred

trigger supplier of leading original equipment manufacturers. Prior to

joining the company’s operations in 2016, Mr. Richardson worked in

the financial services sector as an investment banking professional,

focusing primarily on mergers and acquisitions. He launched his own

merchant banking firm in 2010, developing a diversified portfolio

of private equity investments. Mr. Richardson holds a Bachelor

of Commerce (Honours) from Queen’s University and the ICD.D

designation from the Institute of Corporate Directors in Canada.

AboutJamesRichardson&Sons,Limited

Established in 1857, James Richardson & Sons, Limited is a

private, family-owned and operated corporation involved in global

agriculture and food processing, as well as energy exploration,

transportation and marketing, financial services, insurance and real

estate. Headquartered in Winnipeg, Manitoba, JRSL has assets and

operations strategically located across Canada, the United States and

the United Kingdom.

jrsl.ca

DANIELR.HURSH BRYDENR.RICHARDSON

WEDNESDAY,SEPTEMBER11,2019| THEGLOBEANDMAILO B 3

New housing starts climbed
sharply in Canada last month, dri-
ven by accelerating construction
in Ontario and Quebec, while ev-
ery province from Manitoba west-
ward saw declining activity.
The sharp divide in new con-
struction activity among regions
of the country mirrors the resale
home market in Canada, where
sales have climbed this year in
Ontario and Quebec, but weak-
ened across the Prairies and Brit-
ish Columbia.
New housing starts were up 12
per cent nationally in August
compared with the same month
last year as construction began on
17,611 new homes last month, ac-
cording to new data from Canada
Mortgage and Housing Corp.
Housing starts rose 62 per cent
in Quebec and 32 per cent in Onta-
rio compared with August last
year, according to CMHC, while
activity fell by 35 per cent in Mani-
toba, 6 per cent in Saskatchewan,
8 per cent in Alberta and 19 per
cent in B.C.
Real estate markets have
grown strongly in Ontario this
year and have climbed for the past
two years in major centres in Que-
bec, as both provinces have re-
corded economic growth and
strong population increases. Al-
berta and Saskatchewan have
struggled with weakening com-
modity prices, and B.C. has faced a
series of housing regulatory
changes that cooled buyer de-
mand in 2018 and 2019.
Housing starts also climbed by
28 per cent in Atlantic Canada in

August, but the increase was due

primarily to the launch of multi-

unit buildings in New Brunswick.

CMHC chief economist Bob

Dugan said construction starts on

detached houses trended higher

in both July and August after

about a year of declines. But one

of the biggest factors pushing

housing starts higher has been in-

creasing launches of condomini-

um projects in many large cities,

he said.

In the Greater Toronto Area, for

example, detached house starts

climbed 7 per cent in August com-

pared with last year, while

launches of other types of hous-

ing – including high-rise condo-

miniums – rose 31 per cent.

Housing starts soared by 120

per cent in the booming Montreal

market and 134 per cent in Que-

bec City last month compared

with August, 2018.

Vancouver has struggled, how-

ever, as the region has faced a ma-

jor real estate downturn, which

has led to a sharp downturn in the

resale housing market and has

made developers more leery

about launching new projects

while demand remains weak. To-

tal starts fell 20 per cent last

month from a year earlier.

Toronto-Dominion Bank econ-

omist Rishi Sondhi said housing

starts in B.C. fell in August after

being inflated earlier in the year

as builders hurried to launch pro-

jects ahead of new development

fees.

The city’s new fees came into

effect on May 1, spurring a sharp

increase in construction launches

in April. The volume of building

permits issued in the Vancouver

region in April more than dou-

bled compared with their 2018

level.

In July, Vancouver’s city coun-

cil decided to cancel a planned

5.2-per-cent inflationary increase

in various development cost le-

vies and other fees for new resi-

dential projects, which were set to

come into force in September.

The city said it was concerned

about the downturn in the city’s

residential building sector this

year.

On an annualized basis, hous-

ing starts in Canada are on track to

hit 226,600 this year, which is

ahead of economists’ predictions

of 212,500. Starts in August were

up 1.9 per cent compared with Ju-

ly on an annualized basis.

National Bank of Canada econ-

omist Jocelyn Paquet said single-

family home starts in urban areas

reached a 13-month high in Au-

gust on an annualized basis, after

adjusting for seasonal variations,

just months after starts hit their

lowest level on record in February.

Mr. Sondhi said the third quar-

ter of 2019 is likely to be healthy

for residential activity, especially

combined with an anticipated in-

crease in existing home sales.

Also Tuesday, Statistics Canada

said the value of new building

permits issued across Canada

climbed 3 per cent in July com-

pared with June. Most of the gain

came from the industrial, com-

mercial and institutional building

sector, where permits climbed by

4.3 per cent over June and 9.7 per

cent compared with July last year,

while residential construction

permits were up a more modest

2.2 per cent over June, and fell 4.

per cent compared with July last

year.

HousingstartsriseinOntario,Quebecas

WesternCanadaseesdeclineinactivity:data

JANETMcFARLAND
REALESTATEREPORTER

REPORTONBUSINESS|

Office-sharing startup WeWork is pressing
ahead with plans to go public despite luke-
warm interest in its shares, three sources
said, leaving its largest investor,SoftBank
Group, with a stark choice: take a haircut or
pony up even more cash.
The We Co., WeWork’s parent, may seek
a valuation as low as US$15-billion to
US$18-billion in an initial public offering,
down from the US$47-billion value it com-
manded in the last private fundraising
round in January, one source familiar with
the situation said.
That means SoftBank, which has invest-
ed US$10.65-billion in WeWork since 2017
through its Saudi-backed US$100-billion
Vision Fund and other vehicles, would
have to write down the value of its invest-
ment should the IPO go ahead.
Sources familiar with the situation cau-
tioned that no final decisions have yet been
made and the plans around valuation and
timing of the IPO are all still subject to
change. The sources requested anonymity
because the matter is private. SoftBank de-
clined to comment. We Co. also declined to
comment.
The sharply lower valuation reflects
concerns around the sustainability of We
Co.’s business model, which relies on a mix
of long-term liabilities and short-term rev-
enue, and how such a model would weath-
er an economic downturn, according to in-
vestors and analysts.
A sharp cut to WeWork’s valuation
would be a blow to SoftBank as at a time
when it is seeking funds from investors for
a second Vision Fund, for which it says
US$108-billion in pledges have been se-
cured.
Returns for SoftBank first Vision Fund
have already been hit by lacklustre listings
of Uber and Slack.
SoftBank chief Masayoshi Son and long-
time lieutenant and group vice-chairman
Ron Fisher were in favour of the WeWork
IPO until last week, even as others inside
the group were pushing for a delay, one of
the sources said. However, in recent days
Mr. Son and Mr. Fisher have now conceded
internally that a delay might be in Soft-
Bank’s best interests, the source added.
Mr. Son and SoftBank have been push-
ing We Co. chief executive Adam Neumann

to delay the IPO but have so far failed to

persuade him, according to two sources fa-

miliar with the matter.

Having burned through US$2.36-billion

in cash in the first half of the year, WeWork

requires a fresh injection of funds and is

looking to raise between US$3-billion and

US$4-billion in the IPO, Reuters has report-

ed.

Adding to the importance of We Co. go-

ing public is the US$6-billion in bank com-

mitments it secured in August, which is de-

pendent on it raising at least US$3-billion

from the IPO.

Given its need for cash, a postponement

of the IPO would be feasible if SoftBank

would inject more cash into WeWork, a

proposition Mr. Son has so far been reluc-

tant to pursue given how much the fund

has already put in, according to two sourc-

es.

For its part, WeWork may now wait until

Monday of next week to begin its roadshow

to pitch the IPO to investors given that it is

still waiting on approval for its filing from

the U.S. Securities and Exchange Commis-

sion, according to one source familiar with

the matter.

The company had previously hoped to

be in a position to begin its IPO roadshow

as early as this week, Reuters has reported.

Reflecting the uncertainty in its IPO

plans, We Co.’s US$669-billion junk bond

issued last year fell below par on Tuesday

for the first time since announcing its IPO

plans about a month ago. The 7.875 per cent

note due in May, 2025, was down 2.5 cents

on the dollar and the yield surged by 55 ba-

sis points to the highest since mid-August.

While SoftBank and its Vision Fund em-

phasize their long-term investing creden-

tials, founder and CEO Mr. Son has set out

an ambitious IPO pipeline for tech invest-

ments spanning ride-hailing, fintech and

health startups.

The tech conglomerate has burned

through much of the US$100-billion raised

by its first Vision Fund in just two years, re-

cording big paper gains on internal reval-

uations of its tech investments as well as

the sale of marquee investments including

India’s Amazon Inc. rival Flipkart.

SoftBank says its valuation techniques

include cash-flow analysis, recent transac-

tions and comparison with peers to under-

pin its numbers, but Mr. Son has won a rep-

utation for intuitive bets and for doubling

down on companies which have yet to gen-

erate hard results.

SoftBank says many investments re-

ceive a vote of confidence as third parties

come in as co-investors or by making fol-

low-on investments at the same or higher

valuations.

If a tech company shelves an IPO due to a

lower valuation than expected, investors

are generally expected to take that fall into

account when appraising their stakes.

REUTERS

SoftBankleftwithtoughdecision

asWeWorkpushesaheadwithIPO

Holdingcompanymayhave

towritedownvalueofits

investmentifofferingproceeds

ANIRBANSEN
JOSHUAFRANKLIN

ThevaluationforWeWorkownerWeCo.couldbeaslowasUS$15-billiontoUS$18-billion,

according to one source, a significant discount from its previous valuation of

US$47-billion.SCOTTOLSON/GETTYIMAGES

HALIFAXA Nova Scotia Supreme
Court judge has approved the
relocation of QuadrigaCX’s
continuing bankruptcy proceed-
ings from Halifax to Toronto.
The change of jurisdiction
had been requested by the
accounting firm investigating
the exchange’s collapse, as the

case is now largely focused on

people and assets residing in

Ontario.

Accounting firm Ernst &

Young had said that the in-

volvement of several law en-

forcement agencies and regu-

lators investigating Quadriga-

CX’s downfall means the case

will require multiple court ap-

pearances in Toronto.

Of the QuadrigaCX users who

lost money, 39 per cent were

based in Ontario, 19 per cent

were in British Columbia and 14

per cent were in Quebec, while

1.4 per cent lived in Nova Scotia.

THECANADIANPRESS

JUDGEPERMITSTRANSFEROFQUADRIGACASETOTORONTOCOURTFROMHALIFAX

Catalyst Capital Group Inc.has

amassed a 16-per-cent stake in

Hudson’s Bay Co.as the Toron-

to-based private-equity firm

seeks to stymie a privatization

bid from the retailer’s executive

chairman.

Catalyst said in a regulatory

filing on Tuesday that it controls

29.4 million HBC shares after a

tender offer for $10.11 a share it

completed last month. The firm,

led by financier Newton Glass-

man, spent $187-million on the

stock, which added to a position

it had previously purchased.

HBC executive chairman Ri-

chard Baker is leading a $1-bil-

lion bid to take the company pri-

vate, and his group, including

Rhone Capital LLC, office-shar-

ing company WeWork, the Abu

Dhabi government’s investment

vehicle and U.S. investment firm

Abrams Capital Management,

controls 57 per cent of the shares

outstanding. A special commit-

tee of the HBC board has yet to

issue its formal response to Mr.

Baker’s $9.45-a-share proposal,

but it already said it believes the

offer to be inadequate.

For the bid to be successful, a

majority of the minority shares

must be voted in favour, and Ca-

talyst’s increased position makes

that prospect look more remote,

at least at the price proposed.

The Baker plan remains a pro-

posal at this stage and a vote will

not be scheduled until an offer is

formalized.

Other minority shareholders,

including investment firms Land

& Buildings Investment Manage-

ment LLC and Sandpiper Group,

have come out in opposition to

the privatization, saying it vastly

undervalues the worth of HBC’s

real estate holdings.

HBC is scheduled to release its

second-quarter results and host

a conference call on Thursday. Its

shares closed up 1.3 per cent at

$9.95 on the Toronto Stock Ex-

change on Tuesday.

Catalyst

disclosesithas

raisedHBC

staketo16%

JEFFREYJONES

MERGERSANDACQUISITIONS

REPORTER