2015 Western CGCA — Deal Making
Curt Bernardi has tapped into the deal mother load at Silver Wheaton Corp., thanks to the streaming finance market.
Bernardi, recipient of the Deal Making honour at the 2015 Western Canada General Counsel Awards, joined Silver Wheaton at the right time in 2008. Silver Wheaton was the first precious metal company to use streaming as a means to acquire silver and gold production.
That means Bernardi has been at the centre of the maturation of the streaming finance market, watching it evolve and grow, as Silver Wheaton has become the largest metal streaming company in the world.
“When I joined, it was still pretty early. The (streaming) industry was still pretty new and trying to find out where it was going to go. It was a great role for me. We didn’t have a set way of doing things. There was a lot of evolution that made it very interesting for me.”
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Silver Wheaton provides an up-front payment to secure a base metal mine’s non-core silver or gold production over a period of years at a fixed price. Silver Wheaton sells this “stream” of silver or gold at the spot price once the mineral is out of the ground.
Streaming is becoming an attractive alternative source of capital that companies can tap when building their mines. In difficult capital markets, it’s a viable way for miners to get their projects moving, Bernardi said.
It’s been a busy 2015 for Bernardi. Silver Wheaton acquired an additional 25 per cent of gold production from Vale’s Salobo mine in Brazil, building on an earlier deal in 2013. The company has just announced a US$900-million silver streaming agreement with Glencore PLC. The company also secured a US$1-billion term credit facility and issued an US$800-million bought deal financing this year.
Things have changed since he joined the company five years ago. Back then, Silver Wheaton had to spend much of its time educating market players about the advantages of streaming. “We had to convince them it made sense.”
Now, he said, the company is approached to bid on streaming opportunities. “With success comes competition. It’s a much more competitive environment.”
Debra Poon, Enbridge Inc.
David Calabrigo, Canfor Corp.
Joel Schuster, Avigilon Corp.
Poon tackles wide range of responsibilities
Debra Poon drove one of the biggest deals to hit Canada’s market in 2015, an internal corporate realignment. It saw Enbridge Income Fund acquire assets from Enbridge Inc. in a $30.4-billion deal dubbed a “financial strategy optimization.”
It was a deal in which Poon, senior legal counsel at Enbridge Inc., had to walk a fine line, since she was involved in a related-party transaction that had to win over shareholders.
“It was exhausting,” and “challenging, because of the unique structure of the fund,” Poon said. “There were heightened governance concerns.”
The Enbridge Income Fund is one of the holdovers from the heady days of income trusts, which the previous federal government shut down.
Under the asset drop-down deal, the Enbridge Income Fund acquired Enbridge’s Canadian Liquids Pipeline Business and certain Canadian renewable energy assets, transforming the income fund, which is publicly traded, into a premier Liquids Pipelines investment vehicle in Canada. At the same time, it bolstered the dividend growth strategy for shareholders of publicly traded Enbridge Inc., which acquired a controlling interest in the fund.
Poon’s job as senior counsel means she is tasked with a wide range of corporate responsibilities, among them overseeing public and private offerings, preparing board documents, liaising with directors, and dealing with governance and securities regulators.
Poon, who joined Enbridge in 2010, said that over her years of practice “deals have gotten a lot more complex. Deals have changed so much.”
She added that the volatile crude oil price doesn’t help. She sees parallels to the 1980s, when she started practicing law. She expects to see more distressed M&A going forward. As companies get pressured from banks, “we are going to see more mergers’ and takeovers,” she said.
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