October 3, 2009

IVEY FINANCE CLUB NEWSLETTER

Economic Summary - Canada
•  Bank
 of
 Canada
 Governor
 Mark
 Carney
 warns
 Canadian
 Key
Data


Key
Data
(Canada)


Businesses
may
have
to
get
used
to
foreign
exchange
vola6lity.

 2
weeks
ago
 Now

$US/Can
rate
 0.9348
 .9237

•  
 Finance
 Minister
 Jim
 Flaherty
 prepared
 to
 offer
 more

assistance
 to
 unemployed
 if
 condi6ons
 don’t
 improve
 next
 Overnight
rate
 0.2372%
 0.2419%

year.
 T‐Bill
–
1
month
 0.11%
 0.17%

Corp.
Paper
–
1
 0.38%
 0.37%

Economic Summary – U.S. month

•  Fed
 Vice
 Chairman
 Kohn
 reiterated
 that
 low
 interest
 rates
 Prime
Business
 2.25%
 2.25%

seem
to
be
“warranted
for
an
extended
period
of
6me”
 Rate

• 
 Savings
 rate
 falls
 to
 10
 month
 low
 with
 retail
 spending
 up
 GoC
Bond
–
+10yr
 3.91%
 3.83%

1.3%
y/y
in
August
on
strength
of
auto
sales
 Core
CPI

 1.8%
 1.6%

• 
 Conference
 Board’s
 Consumer
 index
 fell
 below
 es6mates
 in
 Source:
Bank
of
Canada



September
to
53.1
from
54.5
in
August.


Market
Summary

(weekly)

2
weeks
ago
 Now

Industry Update –Canadian Financial Services DJIA
 8,799
 8,438

•  RBC buys JPM’s adviser servicing business, S&P
500
 946
 919

•  TD raises rates Nasdaq
 1,859
 1,838

•  BMO’s move to incorporate in China
US
bond
–
10yr
 3.79%
 3.55%

Industry Update – Mining & Forestry
•  Ivanhoe Gets Green Light S&P/TSX
 10,645
 10,390

•  Mercator Acquires Stingray Source:
Bloomberg

•  Gold Continues to Shine
Commodi6es
Watch
(weekly)

Industry Update – Media & Communications
2
weeks
ago
 Now

•  GE Looks to Partnership / IPO options for NBC Universal Stake
Crude
Oil
 72.25
 69.44

•  National Post looks to Acquire CanWest Newspaper Portfolio
Gold
 940
 940

Natural
Gas
 3.86
 4.12

Copper
 2.3465
 2.2724


Source:
Bloomberg


10/7/09

October 3, 2009

Industry Update – Power & Utilities

•  TransCanada to build $1.2B power plant in Oakville
•  Canadian Hydro snaps up "world's largest" offshore wind project
•  Hydro One to start major transmission projects
Industry Update – Real Estate
•  Commercial real estate still slow
•  Convertible deals still getting done
Industry Update - Retail
•  Tesco reports small profit increase
•  Jean Coutu misses 2Q SSS expectations
•  National Retail Association expects holiday sales to fall 1%

Industry Update - Oil & Gas

•  
Second quarter profit numbers, pressured by plunging natural gas prices, lowest since 2001
• 

Crude oil futures may decline as refineries slow operations and demand decreases
 October 3, 2009

Economic Update By: Anna Salim

CANADA 

Bank
of
Canada
Governor
Mark
Carney
expressed
his
concern
over
the
level
of
vola6lity
in
the
foreign

exchange
markets
and
warned
that
Canadian
businesses
may
have
to
get
accustomed
to
this
vola6lity
in

the
value
of
the
dollar
for
“some
6me.”
According
to
Mr.
Carney
currency
values
are
jumping
higher
and

lower
with
uneven
pace
due
to
general
investor
uncertainty
about
the
state
of
the
global
economy.

The
vola6lity
in
the
foreign
exchange
markets
can
be
best
expressed
through
the
U.S
dollar,
which
has

fallen
14%
against
a
basket
of
seven
currencies
since
March.
The
loonie,
the
euro
and
the
Australian
and

New
Zealand
dollars
have
all
appreciated
against
the
U.S
dollar.
This
has
caused
concern
for
exporters

who
are
struggling
to
secure
markets
in
the
ajermath
of
the
global
recession.


In
recent
months,
Mr.
Carney
and
other
policy
makers
at
the
Bank
of
Canada
have
tried
to
dampen
the

loonie’s
rise
by
sta6ng
that
con6nued
strength
will
curtail
growth
and
interfere
in
their
akempt
to
keep

infla6on
advancing
at
about
2%
a
year.
The
purpose
of
this
“jawboning”
is
to
discourage
speculators
from

making
a
one
way
bet
on
the
loonie
by
forcing
traders
to
take
into
account
the
risk
that
BOC
could
adopt

a
policy
that
would
make
the
loonie
less
akrac6ve
and
cost
them
money.

However
policy
makers
are

limited
in
how
much
they
can
do
and
Mr.
Carney

doesn’t
think
the
central
bank
has
the
ability
to

fundamentally
change
the
loonie’s
value.


Finance
Minister
Jim
Flaherty
said
he
expects
high
levels
of
unemployment
to
con6nue
next
year
and

that
he
is
prepared
to
offer
more
help
to
the
jobless
if
condi6ons
worsen
next
year.
“I
think
we
have
to

keep
watching
and
if
there
are
persis6ng
challenges
with
respect
to
employment,
it
might
be
necessary

to
do
more,”
Mr.
Flaherty
said
in
an
interview
Sunday
in
Turkey’s
financial
capital
where
Finance

Ministers
and
central
bankers
from

the
Group
of
Seven
countries
met
for
the
annual
mee6ngs
of
the
IMF

and
World
Bank.

The
Canadian
job
market,
while
weak
is
s6ll
in
beker
shape
than
the
U.S
job
market.
However,
high

unemployment
in
the
U.S
has
major
implica6ons
for
Canada
because
con6nued
joblessness

will
have
a

nega6ve
impact
on
consump6on
of
Canadian
exports
.
Mr.
Flaherty
said
he
is
under
no
illusion
that
the

2.1%
growth
rate
predicted
for
Canada
in
2010
by
the
IMF
will
be
enough
to
reverse
the
firing
trend.

Canada’s
unemployment
rate
was
8.7%
in
August
and
Canadian
employers
have
shed
387,000
jobs
since

employment
reached
its
peak
a
year
ago.


US
Economists
con6nue
to
believe
that
the
Fed’s
insistence
on
maintaining
the
low
interest
rates
is
a

posi6ve
for
the
economy
given
the
defla6onary
elements
that
are
evident,
believing
that
rates
will
not

be
hiked
un6l
2011.
That
said,
the
speed
at
which
rates
will
then
increase
con6nues
to
be
ques6onable,

and
the
Kohn
said
the
“extraordinary”
level
of
accommoda6on
should
be
a
factor
in
determining
the

speed
of
6ghtening.


Personal
income
rose
0.2%
m/m
in
August
slightly
above
es6mates.
Private
wage
and
salary
growth
rose

by
a
similar
number
to
7.1%,

below
year‐ago
numbers,
showing
the
constrain
consumers
con6nue
to

face.

The
Conference
Board’s
Consumer
Confidence
Index
fell
below
es6mates
to
53.1
in
September
from

54.5
in
August.
The
labor
differen6al
(measures
the
percentage
of
respondents
that
measure
jobs

“plen6ful”
minus
those
saying
jobs
are
“hard
to
get”)
fell
to
‐43.6
in
September
from
‐40.0
in
August
and

‐44.8
in
July.
Analysts
believe
this
suggests
the
unemployment
rate
will

con6nue
to
increase.



10/7/09

October 3, 2009

Canadian Financial Services By: Summer Zaheen

RBC buys JPM’s adviser servicing business, TD raises rates, BMO’s move to incorporate in
China
Analysis

• 
 RBC:
reached
a
deal
to
buy
JPMorgan
Chase
&
Co.'s
investment
adviser
servicing
business,
the
latest

step
 by
 Canada’s
 largest
 bank
 to
 expand
 its
 U.S.
 wealth
 management
 division.
 The
 business
 will
 be

renamed
and
become
part
of
RBC
Advisor
Services,
a
unit
of
RBC
Wealth
Management's
U.S.
division

that
 specializes
 in
 providing
 custody
 and
 clearing
 services
 to
 high‐performing
 third‐party
 registered

investment
 advisors.
 RBC's
 wealth
 management
 division
 has
 recruited
 more
 than
 300
 financial

consultants
this
fiscal
year.


• 
 TD:
is
the
last
of
the
big
banks
to
respond
to
the
financial
crisis
by
raising
interest
rates
on
secured

lines
 of
 credit
 leaving
 customers
 agitated,
 par6cularly
 at
 a
 6me
 when
 things
 look
 much
 beker
 in
 the

financial
markets.
The
delay
is
in
response
to
the
high
costs
of
borrowing
funds.
 
All
major
banks
offer

secured
credit
lines
at
prime
plus
one
and
TD's
delay
suggests
it
was
trying
to
do
right
by
its
customers

through
the
crisis
but
is
now
doing
right
by
its
shareholders.


• 
 TD
Bank:

“America’s
most
convenient
bank”
suffered
from
a
system
failure
leaving
several
customers

angry
and
federal
regulators
on
standby.
The
problem
began
last
week
as
TD
Bank
tried
to
integrate
the

computer
 and
 web
 systems
 of
 TD
 Banknorth
 and
 Commerce
 Bank,
 which
 recently
 merged.
 TD
 Bank

says
it
is
focusing
on
resolving
the
problems
before
it
determines
exactly
what
went
wrong
and
does

not
yet
know
how
much
the
issue
might
cost
them.


• 
BMO:
China’s
banking
regulator
has
given
BMO
preliminary
approval
to
incorporate
in
their
country,
a

move
that
will
allow
them
to
do
everything
from
accept
deposits
in
local
currency
to
sell
investment

products.
BMO
expects
to
receive
final
approval
by
the
middle
of
next
year,
making
it
the
first
Canadian

bank
–
and
one
of
roughly
30
foreign
banks
–
to
incorporate
in
China.


Implications
• 
 Canada's
 biggest
 banks
 con6nue
 to
 emerge
 from
 the
 financial
 meltdown
 at
 the
 top
 of
 the
 game,

having
accepted
no
government
bailouts
and
enjoying
high
levels
of
excess
capital.

 October 3, 2009

Mining By: Brandon Gerson

Ivanhoe
Gets
Green
Light;
Mercator
Acquires
S@ngray;
Gold
Con@nues
to
Shine


Industry Highlights
• 
 Ajer
six
years
of
nego6a6ons,
Ivanhoe
Mines
Ltd.
(TSX:
IVN,
$13.50)
and
partner
Rio
Tinto

signed
an
agreement
with
the
Mongolian
government
to
develop
the
US$4
billion
copper‐gold

property
Oyu
Tolgoi

• 
 Mercator
Minerals
Ltd.
(TSX:
 
ML,
$3.00)
has
entered
into
a
friendly
transac6on
to
acquire

S6ngray
Copper
(TSX:
SRY,
$0.70)
for
$45
million
to
add
more
copper
to
its
produc6on
profile

• 
 Gold
con6nued
to
hit
new
highs
as
investors
looked
for
safety
ajer
a
worse
than
expected

Non‐Farm
Payrolls
report
and
fresh
declines
in
the
U.S.
Dollar
brought
new
fear
to
the
market

Analysis
• Ivanhoe
Agreement:
Ajer
six
years
of
nego6a6ons,
Ivanhoe
Mines,
led
by
famed
minefinder

Robert
Friedland,
and
interna6onal
mining
giant
Rio
Tinto
have
signed
an
agreement
with
the

Mongolian
Government
for
development
of
the
US$4
billion
Oyu
Tolgoi
copper‐gold
property.

The
mine
is
expected
to
start
produc6on
in
2013
and
generate
US$30
billion
to
US$50
billion
of

revenue
over
a
30
year
life.
Oyu
Tolgoi
(meaning
“Turquoise
Hill”)
is
situated
80
km
from
the

Chinese
border
and
its
rail
connec6on
has
already
been
partly
built.
Ivanhoe
has
already
invested

US$500
million
on
development.
At
peak
produc6on
the
mine
is
expected
to
produce
450K

tonnes
of
copper
and
330K
ounces
of
gold
annually.

• Mercator
–
S3ngray:
Mercator
Minerals,
a
single‐mine
producer
of
copper
and
molybdenum
in

Arizona,
broadened
its
asset
poruolio
with
the
purchase
of
S6ngray
Copper.
S6ngray’s
El
Pilar

project
is
located
in
mining‐friendly
Mexico
and
is
expected
to
start
produc6on
in
2010.
The

ra6onale
for
the
acquisi6on
was
to
broaden
Mercator’s
produc6on
base
and
grow
produc6on.

• Gold
Con3nues
to
Shine:
Gold
hit
a
new
intraday
high
of
$1,045
per
ounce
as
it
is
viewed
as
a

safe
harbour
against
a
falling
dollar
and
recession.

Implications

• 
The
Ivanhoe
agreement

adds
significant
expected
copper
produc6on
to
the
world
supply
and

also
makes
the
company
an
akrac6ve
take‐out
play
to
Rio
Tinto.

• Mercator
appears
to
have
paid
a
fairly
fulsome
price
for
S6ngray,
however,
the
posi6ve
is
that

the
produc6on
profile
of
its
assets
is
now
somewhat
diversified
and
as
a
larger
producer
other

acquisi6ons
are
now
more
within
their
reach.

• With gold hitting new highs we might see a large amount of new equity financings
Separate Supplementary Information:
• Ivanhoe
Mines,
TSX:IVN,
Market
Cap:
C$4.9B,
P/NAV
–
0.8x
(TD
Est.),
Industry
Avg:

1.1x

• Mercator
Minerals,
TSX:ML,
Market
Cap:
C$550M,
P/NAV
–
1.0x
(SC
Est.),
Industry
Avg:
1.1x

• 
Op6onal
Readings:
“Friedland
Poised
to
Snare
Mongolian
Motherlode”:

hkp://www.theglobeandmail.com/globe‐investor/friedland‐poised‐to‐snare‐mongolian‐motherlode/ar6cle1312914/


 October 3, 2009

Retail By: Michael Arblaster and Adir Koschitzky

Tesco
reports
small
profit
increase,
Jean
Coutu
misses
2Q
SSS
expecta@ons,
Na@onal
Retail

Associa@on
expects
holiday
sales
to
fall
1%



Analysis
• 
 Tesco,
the
world’s
3rd
largest
retailer
and
indicator
of
interna6onal
retail
strength
saw
a
1.3%

profit
increase
y/y,
the
lowest
in
11
years.
 
Same
store
sales
in
Britain
were
up
3.7%,
but
the

health
of
consumers
in
other
parts
of
Europe
strained
profits.


• 
Jean
Coutu
reported
2Q
earnings
of
$.16
that
were
slightly
below
expecta6ons
on
SSS
of
3.8%

vs.
est.
of
4.1%.
While
pharmacy
sales
were
above
consensus,
front
end
SSS
were
up
1.3%
vs.

2.5%
est.
However,
net
income
of
$14.9
M
marked
an
improvement
over
last
years
$40
M
loss

as
 a
 result
 of
 a
 write
 off
 rela6ng
 to
 Rite
 Aid.
 The
 company
 has
 been
 successful
 in
 gaining

market
share
in
Quebec
and
expanded
its
franchisee
network.

• 
The
Na6onal
Retail
Associa6on
is
sewng
expecta6ons
for
the
4Q
with
a
predic6on
that
rising

unemployment
and
wage
cuts
will
cause
a
1%
decline
in
the
vital
holiday
shopping
season.
The

season
can
akribute
25‐40%
of
FY
sales,
and
the
reac6on
to
the
recession
last
year
was

extreme
price
cuwng.


Implications

• 
Tesco
needs
to
see
strength
in
the
rest
of
the
world,
outside
of
the
70%
of
revenue
that
Britain

makes
up
before
analysts
become
more
posi6ve.
While
it
has
strength
in
its
posi6oning
at
home,

management’s
execu6on
is
being
evaluated
on
the
interna6onal
stage.

• 
 Holiday
 Season:
 Should
 expecta6ons
 be
 accurate,
 it
 would
 mark
 the
 first
 back
 to
 back
 drop

since
the
associa6on
began.
It
will
be
interes6ng
to
follow
as
retailers
have
aimed
at
establishing

a
 “new
 normal”
 in
 which
 they
 have
 met
 consumer
 demand
 in
 focusing
 on
 the
 basics
 to
 meet

selec6ve
 purchases.
 A
 posi6ve
 report
 could
 indicate
 the
 industry
 has
 properly
 rebalanced
 to

meet
the
changes.

• 
 Jean
 Coutu
 is
 expected
 to
 con6nue
 to
 trade
 at
 a
 discount
 to
 the
 group
 as
 it
 focuses
 on
 a

defensive
 stance
 in
 its
 Quebec
 opera6ons.
 Current
 expansion
 and
 growth
 of
 their
 generic

business
 is
 an
 akempt
 to
 fend
 of
 compe6tors,
 not
 a
 pure
 growth
 story.
 Un6l
 that
 strategy

changes,
analysts
remain
skep6cal
of
the
stock’s
room
to
run.


Separate Supplementary Information:

• 
Tesco:
Mkt.
Cap
$30.4
B,
2010E
EPS
$.31,
2010
P/E
14x
inline
with
peers

• 

Jean
Coutu:
Mkt
Cap
$2B,
2010E
EPS
$0.66,
2010
P/E
11x
vs.
12.9x
peers


 October 3, 2009

Power and Utilities By: Satya Dash

TransCanada
to
build
$1.2B
power
plant
in
Oakville,
Canadian
Hydro
snaps
up
"world's

largest"
offshore
wind
project,
Hydro
One
to
start
major
transmission
projects



Analysis

• 
 TransCanada
Corp.(
TSE
:
TRP)
announced
plans
to
build
a
$1.2‐billion
900
MW
natural
gas‐
fired
power
plant
in
Oakville,
Ontario.

• 
It
has
won
the
bid
for
a
20‐year
contract
with
the
Ontario
Power
Authority
to
build,
own,
and

operate
the
plant,
which
is
due
to
start
producing
electricity
by
the
end
of
2013.

• 
Just
days
ajer
Ontario
confirms
feed‐in
tariff
incen6ves,
Canadian
Hydro
(TSE
:
KHD)
acquires

a
giant
4.4GW
Great
Lakes
wind
farm
project.

• 
Canadian
Hydro
paid
an
undisclosed
sum
to
acquire
what
it
says
is
the
largest
offshore
wind

project
in
the
world
from
US‐based
renewable
energy
developer
Wasatch
Wind.

• 
The
new
facility
will
come
online
in
stages,
with
the
first
400MW
to
500MW
of
capacity
to
be

completed
by
the
end
of
2014.

• 
 State‐owned
Hydro
One
said
it
will
invest
C$2.3
billion
over
three
years
on
new
power
line

projects
in
hopes
of
delivering
more
power
to
homes
and
businesses
across
Ontario.

• 
 The
projects
are
aimed
at
spurring
20,000
green
job
while
unlocking
hydroelectric,
wind
and

other
renewable‐energy
resources
that
are
currently
unable
to
connect
to
the
power
grid.


Implications

• 
 The
 Province
 of
 Ontario
 has
 said
 it
 expects
 to
 shut
 down
 all
 its
 coal‐fired
 power
 genera6on

facili6es
by
2014,
and
needs
addi6onal
power
for
the
growing
region
southwest
of
Toronto,

• 
UBS
predicted
the
project
will,
like
its
Portlands
and
Halton
Hills
plants,
earn
a
regulated
rate
of

return
for
20
years,
protec6ng
the
company
from
the
currently
weak
Ontario
power
market.

• 
It
will
add
to
TransCanada's
growth
prospects
with
a
large,
low‐risk
project
while
building
on
its

posi6ons
as
Ontario's
largest
private
sector
generator

• 
 Under
 the
 new
 feed‐in
 tariff,
 Canadian
 Hydro
 will
 be
 able
 to
 sell
 energy
 under
 a
 20‐year

contract
at
$190
(£118)
per
megawak
hour.

• 
The
expansion
plan
by
Hydro
One
is
a
historic
step
forward
for
the
province
as
Ontario
intends

to
be
North
America's
leader
in
renewable
energy.


Separate Supplementary Information:

• Trans
Canada
Corpora6ons
(
TSE
:
TRP)
=
$
32.63
(Oct
2
close)
Mkt
Cap:
$
22.16
B




(up
4.2%
in
3
months)
PE
:
15.00x

• Canadian
Hydro
Developers
(
TSE:
KHD)
=
$
5.01
(
Oct
2
close)
Mkt
Cap
:
$
720.44
M




(up
57.5
%
in
3
months)
Price
/
Book
:
1.49x

October 3, 2009

Real Estate By: Kyle D’Silva

Commercial
Real
Estate
is
s@ll
in
the
doldrums.
Conver@ble
deals
are
geXng
done.


Analysis

• 
The
Canadian
REIT
sector
was
down
2.5%
for
the
week,
but
is
s6ll
up
24.2%
on
the
year.

• 
 CBRE’s
latest
report
on
commercial
real
estate
indicates
that
vacancies
are
up
to
9.4%
YoY

from
 6.3%.
 This
 is
 aggravated
 by
 the
 fact
 that
 both
 inventory
 levels
 as
 a
 result
 of
 new

developments
 and
 unemployment
 are
 increasing
 simultaneously.
 CBRE
 expects
 a
 bokoming

out
occurring
“well
into
2010”.

• 
 According
to
BMO
Capital
Markets,
implied
cap
rates
in
the
REIT
industry
are
at
~7.4%
on

average,
 with
 strength
 in
 the
 mul6‐residen6al
 REITs
 (6.9%)
 and
 weakness
 in
 the
 re6rement

and
hotel
REITs
(8.0%
and
9.7%
respec6vely).
Overall,
the
sector
is
trading
at
a
7.3%
premium

to
NAV.

• 
Summary
of
capital
raises:

1.  
 Whiterock
 REIT
 (WRK.UN,
 $23.32)
 –
 completes
 $20mm
 conver6ble
 unsecured

subordinated
 debenture
 offering
 at
 7.00%
 PA,
 with
 a
 conversion
 price
 of
 $26.06

(~11.75%
ups),
due
12/31/2014.

2.  Sco_’s
 REIT
 (SRQ.UN,
 $6.75)
 –
 completes
 $20mm
 conver6ble
 unsecured

subordinated
 debenture
 offering
 at
 7.75%
 PA,
 with
 a
 conversion
 price
 of
 $8.04

(~19%
ups),
due
12/31/2014.


3.  Crombie
 REIT
 (CRR.UN,
 $10.00)
 –
 completes
 $85mm
 conver6ble
 unsecured

subordinated
 
debenture
offering
at
6.25%
PA,
with
a
conversion
price
of
$11.00

(~10%
ups),
due
06/30/2015.


Implications

• 
Office
/
Industrial
REITs
will
con6nue
to
be
laggards
going
forward,
especially
as

unemployment
figures
and
corporate
bankruptcies
in
Canada
con6nue
to
6ck
upwards.

• 
Access
to
capital
will
con6nue,
but
primarily
in
the
debt
and
hybrid
debt
markets,
as
risk

con6nues
to
be
a
major
focus.

In
addi6on,
yields
on
REITs
are

~7.5%
on
average,
hence
there
is

likle
incen6ve
for
investors
to
buy
equity.

• 
However,
the
appe6te
for
risk
con6nues
to
increase,
as
all
three
deals
were
bought
deals,

indica6ve
of
investment
banks
willing
to
underwrite
RE
deals
due
to
pent
up
demand.


Supplementary Information:

• CBRE
–
FASB
and
regulatory
changes
may
further
impair
RE
firm’s
balance
sheets.
(
hkp://www.cbre.com/NR/rdonlyres/8D7AEFC0‐1154‐472A‐8521‐6323B02AE3A6/777874/
FAStalkingCBRE082009.pdf)


October 3, 2009

Oil & Gas By: Emmanuel Amram and Kristine Beese

Oil

• On
Friday,
crude
oil
for
November
delivery
fell
$1.14
to
sekle
at
$69.68
ajer
a
report
showed
the
U.S.

jobless
rate
increased
to
a
26‐
year
high
in
September,
boos6ng
concern
fuel
demand
will
be
slow
to

rebound.
Oil
snapped
two
days
of
gains
as
employers
cut
more
jobs
than
forecast
last
month.

Moreover,
orders
placed
with
U.S.
factories
fell
unexpectedly
in
August,
according
to
the
Commerce

Department.

• Crude
oil
futures
may
decline
next
week
as
refineries
slow
opera6ons
and
demand
decreases
before

the
North
American
hea6ng
season
begins.

• Oil
stockpiles
have
risen
around
the
world
as
the
global
economic
crisis
has
cut
sharply
into
energy

demand
but
oil
prices
have
followed
the
recent
surge
in
equity
markets
in
recent
months
as
traders
try

to
gauge
the
6ming
of
a
pick‐up
in
global
energy
demand
expected
to
coincide
with
the
world's

emergence
from
the
biggest
economic
slowdown
since
the
1930s.

• The
recent
fall
of
the
US
dollar
also
helped
oil
prices
as
a
weaker
dollar
makes
commodi6es,
priced
in

the
U.S.
currency,
less
expensive
for
holders
of
other
currencies.


Natural
Gas

• 
The
second
quarter
profit
numbers,
pressured
by
plunging
natural
gas
prices,
were
the
lowest
since

2001.

The
current
quarter,
which
ended
last
week,
will
likely
show
similar
pakerns
of
decline.



• 
The
average
spot
price
in
Alberta
from
June
to
September
was
$2.82
per
gigajoule,
down
14%
from

the
second
quarter
of
2009
and
from
the
$7.31
per
gigajoule
average
in
the
third
quarter
of
2008.



• 
For
several
months,
investors
have
looked
in
fear
to
the
end
of
October,
when
North
American
gas

inventories
are
predicted
to
be
at
an
all‐6me
high
heading
in
to
winter.

Glenna
Jones
of
the
Ross

Smith
Energy
Group
predicts
gas
prices
will
average
in
the
$6.50
‐
$7.00
per
gigajoule
range
in
2010,

per
gigajoule
range
in
2010,
up
from
the
current
benchmark
spot
price
in
the
$3.50s
a
level
deemed

too
cheap
for
most
producers
to
add
output.



• 
Canadian
export
volumes
of
natural
gas
have
fallen
by
14.5
%.

At
current
rates
gas
export
volumes
to

the
U.S.
will
be
the
lowest
since
1998.


• 
United
States
natural
gas
inventories
are
on
track
to
hit
a
record
high
despite
slowing
injec6ons.


Bank
of
America
research
notes
that
the
industry
is
close
to
running
out
of
storage
capacity.


Inventories
are
expected
to
eclipse
the
all‐6me
high
of
3.565
trillion
cubic
feet
and
there
are
s6ll
six

weeks
lej
in
the
injec6on
season.


Analysts
are
predic6ng
a
climb
to
a
record
3.9
tcf
by
November,

which
will
test
the
USA
Energy
Informa6on
Administra6on’s
es6mate
of
maximum
capacity.

This
has

prompted
many
companies
to
shut
off
produc6on.



• 
TransCanada
Corpora6on
expects
to
invest
$1.2
billion
in
a
natural
gas
fired
plant
in
Ontario,

scheduled
to
produce
power
by
2014.



• 
Resurgent
natural
gas
prices
have
lijed
shares
of
gas‐weighted
Canadian
energy
companies
this

month,
but
analysts
are
not
yet
to
call
open‐season
on
the
recession‐bakered
sector.


• 
Many
stock
and
trust
unit
prices
are
midway
between
their
12‐month
highs
and
lows,
possibly

represen6ng
an
entry
point.


• 
This
month:
Shares
in
EnCana
climbed
8%,
but
down
15%
from
a
year
ago.

Bonavista
Energy
Trust
is

up
8%,
Paramount
Energy
Trust
and
Enerplus
Resources
Fund
are
up
7%,
but
all
are
well
of
their
52‐
week
highs.

October 3, 2009

Media & Communications By: Josh Chandler

GE
Looks
to
Partnership
/
IPO
op@ons
for
NBC
Universal
Stake,
Na@onal
Post
CEO

Godfrey
backed
by
Private
Equity
looks
to
Acquire
CanWest
Newspaper
Porgolio

Analysis
• 
In
response
to
widespread
reports
and
expecta6ons
that
GE
was
talking
to
cable
operator

Comcast
Corp.
about
selling
a
stake
in
NBCU,
General
Electric
Co.
(NYSE:GE)
CEO
Jeffrey

Immelt
has
announced
it
is
holding
discussions
on
partnerships
or
an
IPO
for
its
NBC
Universal

unit.
Sources
familiar
with
the
maker
say
that
GE
and
Comcast
are
discussing
a
deal
under

which
the
largest
U.S.
cable
firm
would
take
majority
control
with
51%
of
NBC
Universal
and

GE
keeping
the
rest.

• 
GE,
which
owns
80%
of
NBC
Universal,
is
said
to
be
pondering
its
op6ons
for
the
fourth‐
place
TV
network
and
ailing
movie
studio
as
its
partner,
Vivendi,
draws
closer
to
a
decision
on

whether
to
unload
its
20%
stake.


• 
GE
has
not
commented
on
whether
it
was
planning
to
buy
Vivendi’s
20%
stake
in
NBCU.



• 
Na6onal
Post
CEO
Paul
Godfrey,
the
former
CEO
of
Sun
Media
and
the
Toronto
Blue
Jays,

has
said
he
now
has
private
equity
bakers
willing
to
finance
a
management‐led
bid
for
the

storied
daily
newspaper
poruolio
owned
by
his
employer,
CanWest
Global
Communica6ons

Corp.
as
CanWest’s
restructuring
picks
up
speed.


• 
In
1996,
Mr.
Godfrey
led
a
$411
million
MBO
of
what
was
then
Toronto
Sun
Publishing
Corp.

The
deal
proved
wildly
successful
for
its
backers,
which
included
the
Ontario
Teachers'

Pension
Plan.
A
por6on
of
the
company
was
sold
just
over
a
year
later
in
a
deal
that
valued

the
chain
at
$534
million,
then
the
whole
works
was
taken
over
by
Quebecor
Inc.
for
$983

million
in
1999.


Implications

• 
GE
has
the
right
of
first
refusal
to
pick
up
Vivendi's
stake
if
the
French
company
exercises
its

annual
op6on
to
sell.
Vivendi
has
consistently
stated
that
its
NBCU
investment
is
non‐core,

however
most
analysts
think
Vivendi
will
sell
only
if
they
have
something
to
buy.
A
sale
of
its

NBCU
stake
would
allow
Vivendi
to
con6nue
to
expand
in
emerging
markets
and
key
business

areas.

• 
The
newspapers
are
expected
to
be
put
up
for
auc6on
within
the
next
2
months,
and
with

an
es6mated
$200
million
in
annual
EBITDA
and
using
a
5x
trading
mul6ple,
the
poruolio
is

expected
to
fetch
$1
billion
as
creditors
including
Sco6abank
take
control
of
debt‐heavy

CanWest.
CanWest
is
formally
expected
to
announce
a
restructuring
in
next
weeks
that
will

see
creditors
owed
$2.5
billion
swap
their
debt
for
equity.
The
na6onal
chain
of
daily

newspapers
owned
by
CanWest
includes
the
Okawa
Ci6zen,
The
Gazeke
of
Montreal,

Calgary
Herald
and
both
major
Vancouver
papers,
the
Sun
and
the
Province.