North America

Philip Morris International Inc on Friday said its Canadian unit, Rothmans, Benson & Hedges Inc (RBH), was granted creditor protection, following a tobacco class action ruling in Quebec this month, Reuters reported. The company said it would deconsolidate RBH from its financial statements, and it cut its full-year 2019 diluted earnings per share forecast to at least $4.90 at prevailing exchange rates, from at least $5.28 in the forecast it made on March 4, shortly after the ruling in Quebec.

The prior instalment of this sovereign insolvency blog trilogy concluded that "output foregone" is huge in highly-indebted IMF programme countries with high growth potential, the Financial Times reported. That is because in such cases, IMF programme design prioritises debt recovery ahead of activity. It imposes exorbitant primary surplus targets, wrecking the balance between primary spending and low taxes that is necessary to realise high productive potential. Jamaica is a case in point.

The Canadian subsidiary of British American Tobacco PLC has become the second Canadian tobacco company to get restructuring protection in the wake of an $11 billion Quebec appeals court judgment, with the company saying it is under "existential threat" from tobacco suits, Law360 reported. On Tuesday, the Ontario Superior Court of Justice granted protection to Imperial Tobacco Canada Ltd. under the Companies' Creditors Arrangement Act, staying the collection of the more than $6.8 billion the company expects it will owe on the judgment.

Beleaguered rich-lister Eric Watson will likely remain embroiled in courts for years — and faces the possibility of a tax bill of $200m when penalties are added — after a landmark court decision yesterday saw his businesses ruled to have engaged in $51.5m in tax avoidance, The New Zealand Herald reported. Justice Matthew Palmer said a complex 2002 transaction — involving Cayman Island companies while Watson himself was relocating from New Zealand to the UK for tax purposes — was an avoidance arrangement. The case is one of the largest tax judgments in New Zealand history.

The head of SNC-Lavalin told the Canadian government it had to change its anti-corruption rules “as expeditiously as possible” in a 2017 letter to the minister in charge of procurement, just as her department was helping oversee public consultations on lighter punishments for corporate misconduct, The Globe and Mail reported. SNC-Lavalin chief executive Neil Bruce wrote to Public Services Minister Carla Qualtrough on Oct. 13, 2017, and sent copies of his message to seven other senior cabinet ministers. Mr.

Denis O’Brien’s saw its debt burden increase in the three months to the end of December as earnings dipped, increasing pressure on the telecoms group as it seeks to lower its borrowings ratios, The Irish Times reported. The Jamaica-based group, which completed a massive debt restructuring earlier this year, told its bondholders on Wednesday that its net debt amounted to 6.8 times earnings before interest, tax, depreciation (ebitda) at the end 2018, its fiscal third quarter, according to sources.

Seadrill’s core earnings for the fourth quarter exceeded the company’s own guidance, boosted by lower costs and one-off items, while the market outlook for drilling rigs was improving, the Oslo and New York-listed firm said on Tuesday. The company, controlled by Norwegian-born billionaire John Fredriksen, reported $73 million in quarterly adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), more than double the $35 million forecast it made in November, Reuters reported.

Trichome Financial Corp., a company led by Goldman Sachs Group Inc. alumnus Michael Ruscetta, is readying a C$100 million ($75 million) war chest to dive into the business of debt financing for cannabis companies, Bloomberg News reported. Toronto-based Trichome is planning to raise between C$25 million ($18.8 million) and C$35 million of new equity, adding to C$15 million already raised by partners, managers and some investors, Ruscetta said in an interview at Bloomberg’s offices in Toronto.

QuadrigaCX, the Canadian exchange that claimed insolvency after the death of its founder two months ago, was granted creditor protection and a month-long stay of proceedings, Canadian media reported. With 115,000 traders hurt in the recent insolvency crisis, the company may be attacked by lawsuits, and the court decision is a way to diffuse the tension. QuadrigaCX lawyer Maurice Chiasson described the move as “an attempt to call a time-out.” In the meantime, the Nova Scotia police force has begun investigating the case.

For much of the last decade, Canadians have been told their debt levels were unsustainable and that their day of reckoning was fast approaching. Data recently released by the Office of the Superintendent of Bankruptcy (OSB) seem to indicate that day has arrived. According to the data, insolvencies by Canadian consumers were up 9.2 per cent in October 2018, compared to a year earlier, the Financial Post reported in a commentary. To say the least, these results appear alarming. But in light of what we know about homeownership and net worth, we are not so sure.