IFLR 1000
The Guide to the World's Leading Financial Law Firms

Capital markets in Canada were on the upswing in 2010 and early 2011. Domestic investors appear to be gaining confidence and international investors are taking a renewed interest in the country, spurred by its rich reserves of natural resources, the strength of its economy, and the uncertain markets of the US and Europe. The most important developments have included the return of the Canadian IPO, and the growth of the Canadian high-yield debt market.

According to consulting company PricewaterhouseCoopers, 25 IPOs were listed on the Toronto Stock Exchange (TSX) in 2010, valued at $5.2 billion - five times the number of IPOs for 2009, valued at $1.7 billion. Most of the activity was in the mining and energy sectors.

Commodity prices were high during 2010. "Every commodity you can think of in the mining space is trading at an unprecedented level," comments one partner. The US continues to be a major player, with US mining companies raising funds in Canadian capital markets. China, the world's biggest consumer of commodities, is also increasingly gaining ground as a player in the Canadian markets. "China is looking at Canada as a gateway to the United States," notes another attorney. The China Investment Corporation, which manages part of China's foreign exchange reserves, established its first foreign office in Toronto last year.

Significant increases were also reported in the Canadian high-yield debt market as a result of increased liquidity, low interest rates, and the dissolution of income trusts. 12 Canadian issuers sold over $3 billion in high-yield notes in 2010, representing industries such as oil and gas, restaurants, media, transportation and finance.

New challenges may present themselves if the much-debated Canadian Securities Act is passed into law. In an attempt to streamline existing rules and strengthen regulatory power, The Act would create a single national body to oversee securities. The Supreme Court heard arguments related to The Act's constitutionality in April 2011, after the Courts of Appeal in Alberta and Quebec found in favour of provincial jurisdiction. There are currently 13 separate securities regulators - one for each of Canada's provinces and territories.

Nevertheless, one attorney concluded that the Canadian securities industry now appears to be "a vibrant market that really facilitates transactions". "We're back to a deal-friendly environment," he says.

Blakes' securities group is one of the largest in Canada, with over 100 lawyers. The firm advises the country's public companies and investment dealers in a wide range of corporate finance transactions and securities regulatory matters. Its international presence gives it cross-border capability in principal markets. In 2010, Blakes assisted its clients in raising over C$25 billion ($26 billion) in debt and equity financing. The firm boasts strong relationships with Canadian securities regulators.

A client from one international bank praises the firm's ability to anticipate his company's interests and needs. Regarding partner Ross McKee, he says, "I actually refer to him as the Oracle." However, the firm suffered a blow with the loss of Scott Cochlan, Ron Deyholos, Kevin Fougere, and Janan Paskaran to Torys in March 2011.

In deals that closed in August and September 2010 respectively, Blakes acted for a syndicate of underwriters on the $750 million and $700 million offerings of notes by Teck Resources. Proceeds from the issuances were used by Teck to fund cash tender offers to purchase over $1 billion of senior secured notes due in 2014, 2016 and 2019.

Blakes also acted for Genworth MI Canada, the Canadian mortgage insurance subsidiary of Genworth Financial, on its two offerings of a total of C$425 million ($443 million) of debentures. Genworth MI Canada went public in 2009 in the largest IPO in Canada that year. The two debenture offerings completed by Genworth MI Canada in 2010 were its first public offerings following its IPO.

With offices throughout Canada, and a presence in New York, Osler Hoskin & Harcourt continues to earn praise for its capital markets work. It is especially noted for representing underwriters on debt offerings and combined debt and equity deals, and advising issuers on the equity side.

"Osler is very good from a client perspective," says one long-term client. "We've never been disappointed with them."

Last year, Montreal partner Vitale Santoro was appointed to the Securities Advisory Committee, which provides advice to the Autorité des marchés financiers (Quebec) on legislative and policy initiatives and capital markets trends.

In terms of transactions, last year Osler acted for underwriters Morgan Stanley, Deutsche Bank Securities and the RBC Capital Markets in the Calgary-based SMART Technologies' $660 million IPO. Listed on the Toronto Stock Exchange and Nasdaq, it was the largest Canadian technology IPO in a decade and closed in July 2010.

The firm also represented Maple Leaf Foods as Canadian and US counsel, in a secondary offering of common shares by the Ontario Teachers' Pension Plan Board in a "bought deal" closing December 2010. The offering, valued at C$360 million ($375 million), represented all of Teachers' 25% ownership of Maple Leaf Foods.

"The quality of work at Stikeman's is higher than most firms in Canada," observes one client, who has worked with the firm for a decade. "They just seem to have more heavy-weight lawyers." Another client says, "They keep me out of trouble, while still allowing me to be innovative."

Strikeman Elliott's corporate finance and securities offices are headed by Mihkel Voore in Toronto, Jean Marc Huot in Montreal, Christopher Nixon in Calgary and Neville McClure in Vancouver. Partner David Lefebvre left the firm's Calgary office in January 2011.

Many attorneys in Stikeman's securities group have previously worked for securities regulators, and senior partner Edward Waitzer is the former chair of the Ontario Securities Commission (OSC).

Last year, Stikeman acted for the underwriters in the largest IPO in history - General Motors issuance of $23.1 billion in shares on both the New York and Toronto Stock Exchanges. The deal was significant because it was GM's return to the public markets after its bailout by the US and Canadian governments. The transaction closed in November 2010.

The team also worked on the largest IPO by a Canadian technology company in a decade, advising Intel in its $690 million offering, and secondary offering, of SMART Technologies, which closed in July 2010.

In addition to its offices in Toronto and New York, Torys added a new office in Calgary in early 2011, recruiting six new partners in the process. Scott Cochlan, Ron Deyholos, Kevin Fougere and Janan Paskaran join from Blakes, Harold Huber from McCarthy Tétrault, and Neville Jugnauth from MacLeod Dixon. An additional nine associates were also hired over the past year.

The firm's clients include Canada's largest corporations and its five major banks as well as high-profile private equity investors. The Canadian government also calls on the firm to advise on developing policy initiatives.

"They have a very thorough knowledge of the inner workings of what we do," says one client. "They take a very constructive approach to complicated matters." As far as the firm's international capabilities are concerned, he observes, "They could benefit from an office in Europe."

A clear highlight last year, in line with the market trend in increased high-yield work, saw the firm advise Novelis on its $4.8 billion refinancing, including a $2.5 billion high-yield offering led by Citibank.

The firm also represented the Ontario Teachers' Pension Plan Board in its issuance of debentures totaling C$2 billion ($2 billion), offered for sale on a "best efforts basis" by a syndicate co-led by TD Securities and Royal Bank of Canada Securities. The syndicate also included BMO Newbitt Burns, CIBC World Markets and Scotia Capital. The trust will lend the proceeds of the offering to one or more of the entities in the real estate portfolio of the Ontario Teachers' Pension Plan Board, referred to as the Cadillac Fairfield Group. The debentures have been assigned triple-A ratings by DBRS and Standard and Poor's.

"In my view, they're the top-ranked firm in Canada for complicated securities transactions," says one client of 30 years. "Not only do they have good leaders, but the leaders have a good team behind them." Rivals describe Davies Ward as "a boutique firm" primarily concentrated in M&A.

The legal community was shocked by the departure of former partner Mitchell Finkelstein, who resigned in 2010 after accusations of insider trading. Finkelstein had handled some of the firm's biggest cases and was described by one competitor as its "top IPO guy".

Despite this setback Davies reports impressive activity over the last 12 months. The firm acted as Canadian counsel for Barrick Gold, the world's largest gold producer, and its subsidiary Barrick North America Finance, in connection with an offering of $4 billion in debt securities, announced in May 2011. In another large, high-profile deal, the firm served as lead counsel in both the US and Canada for Xplornet Communications, in connection with the private offering of $230 million of securities, one of the largest Canadian financing telecom projects to be announced in 2011.

Goodmans' corporate finance and securities group benefits from a team that includes several lawyers who have served on Canada's top regulatory boards, including the Ontario Securities Commission and the Toronto Stock Exchange.

Over the past year, Goodmans represented Canaccord Financial in connection with the completion of a bought deal offering of 4 million cumulative five-year rate reset first preferred shares for aggregate gross proceeds of C$100 million ($104 million). Canaccord sold an additional 540,000 series A preferred shares for aggregate gross proceeds of C$13.5 ($14 million). The series A preferred shares are listed for trading on the Toronto Stock Exchange.

In December 2010, the firm represented Ivanhoe Mines in an agreement with Rio Tinto International Holdings. The transaction involved a complex financing package intended to secure funding to build the first phase of the Oyu Tolgoi copper-gold complex in southern Mongolia - the world's largest undeveloped copper and gold project. The deal included a $1.8 billion strategic rights offering.

McCarthy Tétrault has an enviable list of clients including: CIBC World Markets, TD Securities, BMO Capital Markets, Scotia Capital Markets and the Royal Bank of Canada. The firm also has an office in London to advise clients on UK and European securities offerings, including those listing on London's Alternative Investment Market (Aim).

"They're very responsive;, very creative and have very good expertise," says one client.

In April 2011, McCarthy acted for Innergex Renewable Energy on its acquisition of Cloudworks Energy for $187 million, including $39 million paid by common shares of Innergex through private placement to Cloudworks' shareholders. To finance the acquisition, Innergex completed a prospectus offering of subscription receipts for aggregate gross proceeds of approximately $166 million in March 2011.

And in the spring of the same year, Graham Cow and Andrew Parker represented a syndicate of underwriters/agents in two public debt offerings and three public trust unit offerings by Calloway Real Estate Investment Trust (REIT). The net proceeds of the offerings, valued at C$300million ($312 million), were used by the REIT to redeem outstanding debt and for general trust purposes.

The Fraser Milner Casgrain corporate finance and securities team led by Michael Melanson saw quite a bit of partner movement last year with Tim Haney and Constance Sugiyama joining the group and Jenny Chu Steinberg, Aaron Lightman and Corina Zatreanu all departing.

Debt side work was the real driver for the firm last year and highlights included acting for Armtec Holdings on its $150 million offering of senior secured notes and advice to Tembec Industries on its private offering of $255 million of senior secured 11.25% notes. This was followed by an offer to exchange those notes for fully registered and fully tradable notes.

Another highlight saw Dale Skinner acting for the Dealer Group on Cenovus Energy's C$1.5 billion ($1.4 billion) MTN programme.

On the equity side John Sabine and Sander Grieve led the team acting for Andean Resources on its $234.5 million offer of public shares.

Following its merger with Lang Michener in January 2011, McMillan finds itself in a stronger position in the market in terms of headcount.

Most of the firm's capital markets work is born out of the mining industry, with both equity and debt mandates coming the firm's way.

In the former category, the team last year acted for Detour Gold on the completion of its C$290 million ($281 million) public offering and $500 million private placement of convertible notes. The funds will be used in part to fund the Detour Lake project. In a similar deal the team also acted for Tahoe Resources on its $383 million IPO on the Toronto stock exchange.

On the debt side, in a restructuring related mandate, the team advised Teck Resources on a series of refinancing transactions which included the offer of $1.45 billion in new senior notes and a separate tender for $2.45 billion in previously issued senior secured notes.

Norton Rose announced its second merger in Canada in October 2011 when it finalised a link-up with MacLeod Dixon. The merger will not be live till next year but it will no doubt increase Norton Rose's capacity.

The department is still made up largely of the former Ogilvy Renault team who maintain a clear focus on debt work. An example of this and one of the firm's largest deals last year saw them act for Valeant Pharmaceuticals on a cross border $1 billion private placement of 6.875% senior notes. In a similar deal, the team also advised Bombardier on a offering of €780 million in senior notes and tender offers for existing notes.

MTN related work was also on the agenda. In one example the team acted for the Royal Bank of Canada on an offering of $1.5 billion in notes under its MTN programme. The firm also advised on an $850 million bond offering. In a similar deal the firm also acted as counsel to VW Credit Canada on its $550 million 2.55% notes issued under Volkswagen's €25 billion debt issuance programme.