North America

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.

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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.

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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.

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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.

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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.

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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.

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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.

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Sunrise Records, a Canadian chain of record stores, agreed to buy most of HMV Group Plc in an auction overseen by the embattled music retailer’s administrators, fending off a rival bid by retail magnate Mike Ashley, Bloomberg News reported. Douglas Putnam, who runs Sunrise and bought HMV’s Canadian unit in 2017, will gain control of 100 stores across the U.K., KPMG LLP said Tuesday. The remaining 27 shops will be shut down, putting 455 employees out of work.

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Canada’s Supreme Court ruled on Thursday that bankrupt oil companies must clean up inactive wells, overturning lower court decisions that prioritized paying creditors and potentially raising the risks of investment in the industry, Reuters reported. The 5-2 ruling means that the Alberta Energy Regulator, which had appealed the earlier court decisions, can order the cleanup of inactive wells even when their owners have filed for bankruptcy protection. “Bankruptcy is not a license to ignore rules,” the court said in a written decision.

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Petroleos Mexicanos bonds cratered after Fitch Ratings downgraded the state-owned company to just a notch above junk, spurring a slide in sovereign debt and the peso, Bloomberg News reported. The yield on Pemex bonds due in 2027 rose 28 basis points to 7.251 percent at 1:02 p.m. in New York, after jumping as much as 40 basis points earlier in the day. Its five-year credit default swaps climbed 24 basis points to 319. Fitch cut the embattled oil producer’s long-term issuer default rating two notches to BBB- from BBB+ and maintained its negative outlook.

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