‘Better not to sit in two places’: HOOPP board overlaps raise concerns

Posted by on Apr 28, 2017 in FP Street, Healthcare of Ontario Pension Plan, Home Capital Group Inc., Jim Keohane, News, Press Releases |

TORONTO — Officials at the Healthcare of Ontario Pension Plan, the large institutional investor behind a $2 billion line of credit extended this week to struggling Home Capital Group Inc., say they were approached Tuesday by the mortgage lender seeking funding. As soon as that happened, HOOPP chief executive Jim Keohane, who was also on Home Capital’s board of directors, “recused himself and turned the negotiations over to HOOPP staff,” Martin Biefer, a pension fund spokesperson, said Friday. “They (the staff) made a decision on whether a deal was possible on terms that were favourable to HOOPP,” he said in an interview. Keohane’s connection to both the borrower and lender led to questions about how the transaction came together, and whether there were any real or perceived conflicts of interest. RelatedHome Capital bleeds another $290 million in withdrawals in just one dayHome Capital Group director Keohane resigns after fund backs $2 billion loan The comments from HOOPP on Friday fill in some of the details, and distance Keohane from the decision-making on both sides of the transaction. Keohane resigned Thursday from Home Capital’s board of directors, which he had joined last year. In a news release issued late Thursday, Home Capital said “it would no longer be appropriate for him to serve as a director given the potential conflicts that might arise from the new relationship.” The statement also revealed that Home Capital’s chair Kevin Smith had resigned from the board of HOOPP, which invests on behalf of healthcare workers in Ontario. Richard Leblanc, a professor of governance, law, and ethics at York University, said it is unusual to have that level of crossover between two boards. The corporate governance concern in such as scenario, he said, is that “it skews behaviour, because you are simultaneously serving two masters.” But Carol Hansell, a corporate governance expert at law firm Hansell LLP in Toronto, said corporate Canada is small enough that such overlaps are not as uncommon as one might think. She said the key in such cases is how potential conflicts are handled. “We would advise that in some situations it’s just better not to sit in two places,” she said. “They will necessarily know a lot about both situations, and so it will be better for them to not have two masters.” While the resignations from the boards of Home Capital and HOOPP resolve some concerns, questions remain about how the deal came together. Leblanc, for instance, would like to know whether any other lenders outside the syndicate were approached or considered. “Normally you shop the opportunity to a number of providers and… you pick the best deal you can get. We don’t know if that was done,” he...

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Imperial Oil worries about competitiveness as it weighs next phase of oilsands growth

Posted by on Apr 28, 2017 in Energy, Imperial Oil Ltd., Oil Production and Refining, oil sands, Press Releases |

Imperial Oil Ltd., the Canadian subsidiary of Exxon Mobil Corp., isn’t joining the exodus of oil majors out of Canada. But Canada’s longest-established oil company isn’t in a rush to expand either as it weighs whether to embark on a new phase of oilsands’ growth. Chairman and CEO Rich Kruger said it needs the deposits, the “heavy hitters” of its Canadian portfolio, to be globally competitive in an environment of lower oil prices, which means the economic tests have “become more stringent than they might have been a few years ago,” he told reporters Friday after speaking to the company’s annual shareholders meeting in Calgary. It’s a unique approach among Canada’s oilsands heavyweights to the sector’s restructuring over the last year, which has seen international companies retreat and Canadian operators expand. But it’s another reminder that capital is mobile and that even deeply rooted companies like Imperial don’t have to accept the higher taxes and more regulation imposed by the Alberta and federal government, largely to meet international climate change commitments, if they are out of step with a world of opportunity. RelatedImperial Oil reverses loss with $333 million quarterly earnings, will increase dividendEnergy head-office tug-of-war could send companies to the U.S., warns Crescent Point’s SaxbergOilsands Canadianization has aligned interests, says Suncor Energy CEO Steve Williams “From a cost standpoint — whether it’s a carbon tax, whether its corporate income tax, municipal tax, revisions to royalties — we look at the cumulative effect and how it affects our competitiveness,” Kruger explained. “At the end of the day, it comes out of our pocket. What you call it doesn’t make much difference. It’s cash in and cash out. “I do have concerns about the economic competitiveness of our resource base in Canada, in Alberta, and I think it’s really important that we not only look at ourselves, but how do we compare to other jurisdictions that are competing with us for investment.” Canada has enjoyed more than its fair share of attention from the Exxon Mobil empire during the past couple of decades. Some would say it was regarded as its crown jewel. A big push was made to build the Mackenzie pipeline, which would have monetized vast gas resources in the Arctic and was shelved because economic conditions changed following an absurdly long regulatory review. Then there were years of aggressive spending in the oilsands to build the Kearl mining project and to expand the Cold Lake in-situ operation. Those heavy investments are paying off with the recovery in oil prices. On Friday, Imperial posted a profit of $333 million for the first quarter, compared to a loss of $101 million in the same period a year ago. Production...

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