The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/133445
re st he el ea ts n mw s, at n n m FOREIGN INVESTMENT 17 it was," Girvan says. "The Exxons or Totals may feel that they're no longer going to have the competition they would have from the Chinese or Kuwait or some of the other state-owned enterprises that might otherwise be competing for an acquisition, so that pricing may not be as robust. That changes the dynamic a little bit in people's minds. Even if the Chinese are not souring on the oil sands because they can no longer do control deals, this may be cause for some sober second thought about what they can do." What SOEs can do without hitting Investment Canada's radar screen is acquire a stake in any company – even in the oil sands – that falls short of a control position. "Minority investments will not be problematic so there are a host of possibilities available to SOEs that want to go into that sector without acquiring control," says John Leopold, co-chair of the mergers and acquisitions group at Stikeman Elliott LLP. But there may turn out to be issues even with joint ventures, says Omar Wakil, chair of the foreign investment review practice at Torys LLP. "I'm not sure the government really thought through the knock-on effects," says Wakil. "The terms in a lot of joint-venture transactions have right-of-first-refusal provisions that would permit the SOE to take out its joint-venture partner. "Under the new environment, there's a big question mark about whether that would be possible. So you have to ask yourself whether that takes away from the commercial desirability of entering into even a joint-venture agreement." Wakil stresses that the vast majority of deals will not be affected by the changes, saying in 2012, "something like 19 deals were approved and only two or three got any degree of publicity or political scrutiny, so we're talking about a small number of transactions. "But SOE investments in the oil sands sector are going to fundamentally change." Here's the thing. It's not entirely clear who will be treated as an SOE for review purposes. A foreign purchaser doesn't get to just make a declaration – private or state-owned? – and have its transaction treated accordingly. Officials at Investment Canada will be looking at foreign private companies to see whether they could be operating on behalf of their government. Private companies may be asked to prove they are not "owned, controlled, or influenced – directly or indirectly" – by a foreign state. Those that can't will be treated as an SOE . Goldman, Jay Goldman, Paul L. Goldsilver, Erik Gow, Graham P.C. Grant, Jonathan R. Cassels Brock & Blackwell LLP (416) 860-6474 jgoldman@ casselsbrock.com Goodmans LLP (604) 608-4550 pgoldman@ goodmans.ca Cassels Brock & Blackwell LLP (416) 860-2901 egoldsilver@ casselsbrock.com McCarthy Tétrault LLP (416) 601-7677 ggow@mccarthy.ca McCarthy Tétrault LLP (416) 601-7604 jgrant@mccarthy.ca Mr. Gow focuses on public company M&A and corporate finance. Recent transactions have been in the financial services, investment banking, mining and real estate sectors. Mr. Grant focuses on M&A, and Canadian and international securities offerings. He advises companies, investment banks and private investors on acquisitions, divestitures and restructuring, as well as domestic and cross-border securities offerings. g nd he n "THE TERMS IN A LOT OF JOINT-VENTURE TRANSACTIONS HAVE RIGHT-OFFIRST-REFUSAL PROVISIONS THAT WOULD PERMIT THE SOE TO TAKE OUT ITS JOINT VENTURE PARTNER. UNDER THE NEW ENVIRONMENT, THERE'S A BIG QUESTION MARK ABOUT WHETHER THAT WOULD BE POSSIBLE." Mr. Goldman's securities and corporate finance practice embraces structuring and negotiating M&A, securities, joint venture and commercial transactions. His clients include issuers and investment dealers/ advisors, many in the mining sector. ROB.indd 17 Mr. Goldman's national, cross-border and international transactional practice focuses on corporate finance/ securities, M&A, governance and mining and natural resources law. His clients include mining, energy, manufacturing and technology companies. Mr. Goldsilver's corporate/ commercial practice focuses on the mining and energy sectors, advising corporations, governments and First Nations on cross-border M&A, amalgamations, restructurings, joint ventures, divestitures and project finance. Grant, K. Vanessa A. Gowling Lafleur Henderson LLP (416) 369-4666 vanessa.grant@ gowlings.com Ms. Grant advises issuers, investors and underwriters on public and private financings (including venture capital financing), initial public offerings, public and private mergers and acquisitions, corporate governance and joint ventures. 13-04-23 12:07 PM