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Gildan’s ousted CEO denies giving M&A ultimatum to directors
The former head of Gildan Activewear Inc. denied that he forced a showdown with the board over its acquisition strategy, escalating the war of words at the Canadian clothing manufacturer.
Glenn Chamandy, who was pushed out as chief executive officer a week ago, said he gave “no ultimatum” to directors that they needed to support potential deals. His statement contradicts what Gildan director Luc Jobin told Bloomberg and other news outlets on Sunday.
Jobin said Chamandy brought the board high-risk acquisition proposals that would have diluted shareholders and left the firm with significantly more debt, and threatened to quit if the board decided not to pursue them.
“This is a sideshow to distract from the reaction the shareholders have had with respect to the board’s handling of succession planning, in which I was not involved,” Chamandy, 62, said in a statement Monday. “I did not and could not orchestrate or control the events; the board conducted the process.”
Chamandy’s statement is the latest twist in a corporate drama that sent Gildan’s stock price tumbling last week.
The board announced last Monday it was replacing him with Vince Tyra, a former Fruit of the Loom executive. Then five large shareholders — including Jarislowsky Fraser Ltd., Pzena Investment Management Inc. and Browning West LP — came out publicly to ask the board to reinstate Chamandy.
The five investment firms, which hold about 25 per cent of Gildan’s shares according to data compiled by Bloomberg, did not immediately respond to inquiries about Jobin’s comments.
Shares of Gildan, which owns the American Apparel brand, slid two per cent at 10:31 a.m. in Toronto.
Mathieu Dion, Bloomberg
Market close: Energy stocks help TSX rise almost 100 points, U.S. markets also move higher
Strength in energy stocks helped Canada’s main stock index gain almost 100 points, while U.S. markets were also higher.
The S&P/TSX composite index closed up 93.56 points at 20,622.71.
In New York, the Dow Jones industrial average was up 0.86 points at 37,306.02. The S&P 500 index was up 21.37 points at 4,740.56, while the Nasdaq composite was up 90.89 points at 14,904.81.
The Canadian dollar traded for 74.70 cents U.S. compared with 74.75 cents U.S. on Friday.
The February crude oil contract was up US$1.04 at US$72.82 per barrel and the January natural gas contract was up one cent at US$2.50 per mmBTU.
The February gold contract was up US$4.80 at US$2,040.50 an ounce and the March copper contract was down four cents at US$3.85 a pound.
The Canadian Press
TPG buys stake in Canadian warehouses from Oxford for $1 billion
U.S. private equity firm TPG Inc. has acquired a majority stake in a portfolio of warehouse properties around Toronto for $1 billion.
TPG will get 75 per cent ownership of two industrial parks in the suburban cities of Brampton and Vaughan, according to a statement Monday, confirming an earlier report by Bloomberg News. The seller, Oxford Properties Group, will retain a 25 per cent interest and continue to manage the assets.
The Greater Toronto Area is “one of the most attractive industrial markets globally,” Jacob Muller, a partner at TPG, said in the statement. “This joint venture provides a unique opportunity to enter the market at scale through the acquisition of some of the highest-quality industrial assets in all of Toronto.”
The transaction is a rare sign of life in a commercial real estate market that’s been ground to a near-halt by interest rates stuck at multi-decade highs. But investors have still been bullish about the outlook for warehouse and logistics properties, one of the best-performing segments, even as the surge in e-commerce activity has cooled since the end of the pandemic.
The TPG transaction values the 5.1 million-square-foot (473,800-square-meter) portfolio at $1.3 billion.
“Oxford is a long-time believer in Canadian industrial,” Jeff Miller, Oxford’s head of North American industrial properties, said in the statement. “We continue to see strong underlying fundamentals within this asset class.”
Trans Mountain builder defends rising costs of pipeline as ‘reasonably and justifiably incurred’
The company building the Trans Mountain pipeline extension has submitted evidence to support its claim that oil companies must pay more in tolls in light of the pipeline project’s mounting costs.
Trans Mountain Corp. says in a new regulatory filing that the increased costs of the pipeline expansion project were “reasonably and justifiably incurred.”
The Crown corporation has successfully applied for permission to charge oil shippers higher tolls once the pipeline expansion is operational, but only on an interim basis until the Canada Energy Regulator makes a final decision.
Trans Mountain Corp. wants to charge oil companies a benchmark toll that is nearly twice the amount of a 2017 estimate, as it seeks to recoup some of the pipeline expansion project’s spiralling capital costs.
The pipeline project, which is more than 97 per cent complete, has gone from a 2017 construction cost estimate of $7.4 billion to a most recent estimate of $30.9 billion.
Trans Mountain Corp. said in written evidence submitted Friday to the regulator that the project was affected by “extraordinary” factors including evolving compliance requirements, Indigenous accommodations, stakeholder engagement and compensation requirements, extreme weather and the COVID-19 pandemic.
The Canadian Press
Midday markets: Investors keep last week’s rally going
U.S. stocks kicked off the week on a positive note buoyed by a burst of deals, even as United States Federal Reserve officials sought to sow doubts that aggressive interest-rate cuts will materialize early next year.
Coming off a seven-week bull run, the S&P 500 rose 0.57 per cent at 4,746.03 while the Nasdaq 100 climbed 0.54 per cent at 14,893.41 after the tech-heavy benchmark closed at a record on Friday. The Dow Jones Industrial Average extended a winning streak, notching another all-time high and was up 0.15 per cent Monday at 37,361.13.
More than US$40 billion of mergers and acquisitions hit the wire on Monday after months of disappointing volumes.
Chicago Fed President Austan Goolsbee and Cleveland Fed President Loretta Mester were the latest to join a growing chorus of central bank officials tempering market optimism after their New York counterpart John Williams last week said bets on a March reduction were premature.
“This week we’ll see whether the stock market’s seasonal tendency to rally in the second half of December bumps up against potential exhaustion amid one of the strongest short-term rallies of the past several years,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.
In Toronto, the S&P/TSX composite index was up 0.45 per cent at 20,620.62 on strength in energy stocks, as the price of oil moved higher.
The Canadian Press, Bloomberg
Average annual rent increases 8.4 per cent in November, flat month over month
A report says the average asking price for a rental unit in Canada was $2,174 in November, relatively flat from the previous month but an 8.4 per cent increase year-over-year.
The data released Friday by Rentals.ca and Urbanation, which analyzes monthly listings from the former’s network, shows the annual rate of rent growth in Canada continues to slow, following increases of 9.9 per cent in October and 11.1 per cent in September.
The average cost of a one-bedroom unit in November was $1,911, up 13.6 per cent from the same month in 2022, while the average asking price for a two-bedroom was $2,260, up 10.5 per cent annually.
The report says there were notable slowdowns in two of Canada’s most expensive major cities for renters. Vancouver saw asking rents rise 0.7 per cent from last year to $3,171, while average asking rents in Toronto decreased 2.4 per cent to $2,913.
Meanwhile, Edmonton overtook Calgary as the leader in rent growth among major markets, as average asking rents in the provincial capital rose 11.9 per cent compared with a year ago to reach $1,472, while the southern Alberta city saw a 10.4 per cent increase to an average of $2,081.
Rentals.ca and Urbanation also note that average roommate rents are nearing four figures, with the asking price for shared accommodations in B.C., Alberta, Ontario and Quebec growing 16.2 per cent over the past year to a record high of $960.
The Canadian Press
Oil gains as BP joins shippers avoiding Red Sea’s rising attacks
Oil rallied as more oil companies and tanker owners began to avoid the Red Sea amid increasingly frequent attacks in the region.
West Texas Intermediate rose as much as four per cent to trade above US$74 a barrel and reach the highest intraday price in two weeks. BP PLC said it will pause all shipments through the Red Sea, while Equinor ASA is diverting vessels away from the region. Euronav NV, a major shipowner, is also keeping its ships clear, citing safety concerns.
The firms’ actions on Monday followed similar moves by container liners. A company that provides ship management and thousands of crew members to vessels was also asking shipowners to consider alternative routes.
“It has been escalating beyond what we have seen at any point in time really,” Lars Barstad, chief executive of the management arm of Frontline PLC, one of the world’s largest tanker owners, said in a Bloomberg Television interview. “We are afraid that it is only a question of time until we see a ship that is completely unrelated to Israel or any part of the conflict that will be attacked.”
Despite the geopolitical risks, crude has still dropped more than 20 per cent from its late-September high and is down around nine per cent for the year amid rising U.S. shale supply and skepticism over promised OPEC+ output cuts. A shifting outlook for Fed rate policy has swung prices in recent days, with officials’ commentary recently dissuading bets on aggressive cuts next year.
The timespreads between monthly contracts, a critical barometer for supply and demand, continue to indicate weakness. West Texas Intermediate’s prompt spread is trading at 35 U.s. cents in contango, the widest discount for near-term barrels compared to barrels to delivered later, since February.
Stocks climb despite pushback on interest rate bets
Stocks are climbing higher this morning, despite central bankers seeking to downplay speculation that interest rate cuts could come early next year.
Coming off a seven-week bull run the S&P 500 rose 0.3 per cent while the Nasdaq 100 climbed 0.1 per cent. The tech-heavy benchmark closed at a record on Friday. The dollar steadied while yields on Treasuries climbed across the curve.
Canada’s TSX was up more than 122 points.
ATB Capital to liquidate failed hedge fund Traynor Ridge
ATB Capital Markets received a mandate to sell the remaining assets of Canadian hedge fund Traynor Ridge Capital Inc., which collapsed after the sudden death of its founder.
The appointment is subject to approval from an Ontario judge, Ernst & Young Inc., Traynor’s court-appointed receiver, said in documents released Dec. 15.
The hedge fund manager left a number of trading firms stuck with “failed trades” — that is, brokers had executed trades on behalf of the company but couldn’t collect payments. The situation ensnared firms including Virtu Financial Inc.’s Canadian unit, Echelon Wealth Partners Inc., National Bank of Canada and JonesTrading Canada Inc., according to documents in the case.
The securities commission filed an order on Oct. 30 to stop Traynor from making further trades, adding that three firms were due $85 million to $95 million for transactions made on behalf of the fund.
Friday’s filing of documents by Ernst & Young gives only limited information about what was inside the Traynor funds. Bloomberg has previously reported that Callahan followed arbitrage strategies and had invested in a number of small-cap firms in the cannabis sector.
The documents suggest the fund was trading frantically in the early part of October and that it suffered significant losses in the weeks leading up to Callahan’s death. “The portfolio includes a number of securities that are illiquid and/or not publicly traded.”
ATB Capital, which is a division of provincial-government-owned ATB Financial, will receive a commission of $350,000, of which half will be paid once the court approves the mandate. If asset sales bring in more than $40 million, the adviser will receive five per cent of the amount above that threshold, according to the notice.
Esteban Duarte, Bloomberg
Stock markets before the opening bell
European stocks paused their advance after officials from the United States Federal Reserve and European Central Bank pushed back against bets of aggressive interest rate cuts next year.
The Stoxx Europe 600 index slipped 0.1 per cent, while futures on the S&P 500 trimmed gains to 0.2 per cent.
The United States dollar was broadly steady while yields on two-year Treasuries dropped three basis points, paring Friday’s jump when New York Fed president John Williams led a chorus of officials in saying it’s too early to begin thinking about lowering borrowing costs.
U.S. shares had their biggest weekly gain in a month after traders interpreted Fed signals last week as a green light to ratchet up bets on rate cuts next year. Now, a raft of central bankers are making the case that market expectation are overdone, with European Central Bank Governing Council member Bostjan Vasle joining the chorus on Monday.
The S&P/TSX composite index closed down 249.65 points at 20,529.15 on Friday.
What to watch today
The Online News Act comes into effect today.
Data releases this morning include construction investment for October and the new housing price index for November.
Need a refresher on Friday’s top headlines? Get caught up here.
Additional reporting by The Canadian Press, Associated Press and Bloomberg