Petronas and Progress
In an announcement earlier this morning shortly before markets opened, Petronas and Progress Energy announced they would be working to cooperatively address the Investment Canada announcement Friday rejecting Petronas’ investment in Progress and meeting with Industry Canada officials. It remains to be seen whether this signal of commitment to negotiate successful undertakings will lead to ultimate clearance of the investment or whether, like BHP’s bid for Potash, Petronas will find that it ultimately cannot meet Industry Canada’s requirements to clear the deal.
In making the announcement, the parties said:
“PETRONAS Carigali Canada Ltd … and Progress Energy … announced today that they will be meeting with officials from Industry Canada in Ottawa to better understand Industry Canada’s requirements with respect to the proposed acquisition of Progress by PETRONAS Canada.
Based on the announcement by the Minister of Industry on Friday October 19, 2012, PETRONAS Canada has up to 30 days, or longer as mutually agreed to, to make any additional representations and submit any further undertakings. PETRONAS and Progress will work together to ensure that the Minister has the necessary information to determine that the proposed acquisition of Progress would likely be of net benefit to Canada.
In conjunction with this 30-day period, and at PETRONAS Canada’s request, Progress has agreed to waive the 10 day notification period required to extend the “Outside Date” under the arrangement agreement between the two companies. Under the agreement, PETRONAS Canada has the right to extend the Outside Date for up to an additional 90 days, in 30-day increments, if required regulatory approvals have not been obtained. If the Outside Date is not extended, the agreement will still continue in effect until terminated by either party.”
Prime Minister Harper (reported by BNN)
BNN reported Monday that Prime Minister Harper said that the Government was committed to the Investment Canada Act, that they intended to issue clearer policy on Investment Canada reviews, but “at this time” the Progress-Petronas transaction did not have net benefit to Canada. (A little more information on promised ICA transparency and some comfort it seems for the markets and investors.)
NDP Natural Resources Critic, Peter Julian
There is a “clear problem here”. Renews NDP calls for “clear criteria” for Investment Canada Act net benefit to Canada test and reiterates criticism of release of decision at midnight on Friday.
Progress CEO Michael Culbert
“I am pleased to say that over the weekend Progress and Petronas had a lot of discussions, and Petronas is very much engaged and once they were over the shock, like the rest of us, we were looking for further communication with Industry Canada to see if the issues could be resolved in a mutually agreeable way in a fairly shot timeline … My feeling today is that I have a lot more positive outlook that the issues at hand [will be resolved]”
Jimmy Pattison
“Happy to see the decision”, “Governments [invest] for different reasons than businesses … with different objectives, timelines and interests”, in the long run investments by foreign governments in Canada is “not good for our country”.
Canadian Trade minister Ed Fast
“This decision does not set a precedent because every single application is considered on its own merits”.
Interim Liberal leader Bob Rae
“Decisions that are made in secret and are made by the [Prime Minister’s Office], are not decisions that build confidence for anyone — not for the people who are against the investment or the people who are making the investment … Nobody knows exactly why the government decided to do what it did.”
NDP leader Thomas Mulcair
“The lack of transparency is starting to reach new heights. Who releases such an important decision at midnight on a Friday? Someone who has something to hide and no way to explain.”
Canadian Finance Minister Jim Flaherty
[The Canadian Government welcomes foreign direct investment but bids like Petronas’] must “be correct”.
“I’m not involved in those discussions directly. The minister of industry is … I’m sure they’ll continue to work on it. There’s another period of time during which they can continue to have discussions and try to satisfy the concerns that the Department of Industry has.”
Slate commentary
“Is everything sacred in Canada? At first it was a hole in the ground. Then it was the stock exchange and a DIY chain. This week, regulators blocked two more big deals, including a $5.2 billion bid for Progress Energy by Petronas of Malaysia. Taken as a whole, these actions signal the market for corporate control in Canada – especially when it comes to foreign buyers – is effectively closed.”
Brompton Group portfolio manager
“It’s going to be very tough … It could be a bloodbath”.
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