VICTORIA - I can see why people are worked up about the takeover of Terasen Inc. by U.S.-based Kinder Morgan.
There are reasons to worry , and to feel betrayed. It was only two years ago, as Terasen successfully lobbied the government to lift Canadian ownership requirements, that CEO John Reid downplayed worries about a takeover. "Our head office is firmly planted here in Vancouver, British Columbia, and we have every intention of keeping it that way," he said then.
But still the government is right to keep its hands off the deal, and resist the call to use it as a weapon in the softwood battle.
First some history.
Terasen, known as BC Gas until two years ago, was a publicly owned natural gas distributor for 50 years.
In 1988 the Socreds decided to privatize the utility. But the Vander Zalm government was worried that foreign ownership, or control by any small group of owners, would hurt B.C.'s interests. So it passed a law limiting foreign ownership to 20 per cent of shares, and barring anyone from owning enough stock to exercise control.
The law lasted for 15 years, until the Liberal government repealed it in 2003. There was no real debate or discussion. The two-person NDP opposition was focused on bigger BC Hydro issues in the same piece of legislation; Liberal MLAs asked no questions.
The Liberals said the change was needed because government shouldn't be setting ownership rules for a private company. The new freedom would make it easier for Terasen to raise money through stock issues, it said.
They are not bad arguments, but it might have been a tough sell if people were paying attention. More than 6,000 British Columbians have written letters opposing the Kinder deal.
Terasen is big in the pipeline business, moving oil from Alberta into B.C. and to five U.S. states. (It does not actually produce any oil or gas.)
But the corporation's core business is delivering natural gas to about 880,000 B.C. households and businesses. It's a monopoly, regulated by the BC Utilities Commission, and the company's performance and rates are important to more than half of British Columbians.
They have some right to be concerned. Gas distribution in B.C. was hugely important to Terasen. To Kinder Morgan, it is just another profit centre. Terasen, as one of B.C.'s largest corporations, was conscious of its image and reputation. Kinder Morgan will be much less interested.
But the time for such concerns is past.
The law was changed. Kinder Morgan made an offer to buy the company, obeying all the rules, and the shareholders have accepted. The deal is worth about $700 million in gains to Terasen shareholders. (About half the shares are held by pension and mutual funds and other institutions.) It would be wrong to leap in now.
The sale still has to be approved by the BC Utilities Commission, which will look at whether it is in the public interest. A federal review is also under way. British Columbians will have to count on those reviews establish that their interests can be protected.
The New Democrats, with Corky Evans in the lead, have been calling on the government to stall the sale as a pressure tactic in the softwood dispute. Richard Kinder, the acquisitive CEO, is a friend and supporter of George Bush. Holding up the sale for 90 days could encourage Kinder to tell Bush that energy matters more than softwood, they argue.
It's appealing, but not the right action. The delay would penalize Terasen shareholders for something they nothing to do with, and send a message that B.C. is a risky place to do business.
Especially because a 90-day freeze is unlikely to have any impact, leading to pressure for a longer and longer delay.
Basically, this is just another corporate takeover, changing one group of self-interested shareholders for another.
And that's really not the government's business.
Footnote: The sale means Vancouver loses another corporate head office. On a per capita basis, B.C. already trails four provinces - including Manitoba - in the number of head offices located here. It's a significant problem. Corporate head offices provide increased business and career opportunities, and tend to offer more support for community projects of all kinds.
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9 comments:
Unconstitutional?
The law lasted for 15 years, until the Liberal government repealed it in 2003.
I wonder if the NDP has the courage to say: 'All laws passed by the BC Liberals in their first term are null, void and unconstitutional because they did not recognize the official opposition.'
Somehow I doubt it.
Willcock's writes:
The law was changed. Kinder Morgan made an offer to buy the company, obeying all the rules, and the shareholders have accepted. The deal is worth about $700 million in gains to Terasen shareholders. (About half the shares are held by pension and mutual funds and other institutions.) It would be wrong to leap in now.
I guess I missed it, but when the BC teachers went out in protest over Bill 12, which replaced the exisitng Essential Services legislation, which the teachers were complying with, all I heard were press cries that the teachers had to respect the rule of law and bow down to the Bill. So if the government changes the rules now and it impacts Terasen shareholders negatively, so what? The important thing would be compliance with the rule of law wouldn't it? After all, legislating existing collective agreements out of existence affects workers, but that didn't bother the government, or the press fou years ago. Why is it that "shareholders" are given such elevated status that only they deserve to be treated "fairly".
Yeah, oh those poor terasen shareholders, we have to do the right thing. Gawd, how naive!
Hey Paul how about reading a economics book one of these days. Some of those nobel prize winners are pretty smart cookies, and they've even written some books. You might check them out. Things have changed a little since the glorious heyday of Milton Friedman.
The other question that gives pause is why the Liberals decided that they *wanted* Terasen to be bought. There is no other reason for making the change in law allowing it other than the Liberals wanted it to be sold.
You can go look at the history of Terasen shares and quite easily deduce that there was no great need for attracting more money. The shares were over performing. Value was high. Cash flow was excellent. Predictions of future performance were excellent.
Terasen was not in need of a buyer in any way shape or form.
So why deliberately create the condition to allow it to be sold?
There's a back story here somewhere. It's too bad that we don't have any investigative journalists with the balls to get into it.
Isn't it Paul?
Anonymous said "So why deliberately create the condition to allow it to be sold?
There's a back story here somewhere..."
Yes, it starts with how much did Terasen pay the BC Liberal party, in the form of political donations, to make the necesary legislative change.
This perfectly illustrates the utter corruption of our political system: For about a 10% investment in the form of political donations, a company can buy itself the necesary political support to effect a simple legislative change that produces $700 million in shareholder profits while jeopardizing the security of virtually every household in the province.
Since it's now "the law", the establishment huffs & puffs, lecturing distraught consumers about the need to respect the rule of law & order.
People will tolerate a certain amount of corruption, abuse of power and oppression, especially if they are getting some of the crumbs; but sooner or later, they will have enough and rise up against it. Many of us are there already, and we're just waiting.
"...how much did Terasen pay the BC Liberal party, in the form of political donations...
The information is publicly available.
Stop whining and start digging.
www.elections.bc.ca
I, too, am horrified that these Liberals are selling off what was once our publicly owned B.C. Gas. Is there anything left for them to sell I wonder? As someone said "I wonder how much went in to the Liberal coffers through this sale" - what a bunch they are under this Gordon Campbell. They kept saying how it was the seniors who built B.C. and "we have to look after our Seniors" (Carole Taylor) Ad Nauseum in the lead up to her budget - I thought we must at least be getting back our Pharmacare Programme back - Joke!! These guys certainly won't have to forego buying their medications through lack of money - it will all be stashed away in offshore bank accounts somewhere.
Lost this reader, Wilcocks.
You're just another corporate whore arencha?
Keep the kleenex handy.
I sent the following email to three Terasen addresses and the BCUC: "With the unfortunate news that the sale to Kinder Morgan is approved by the BCUC, I regret to inform you that I will no longer be using Terasen Gas for my home heating needs. Until such time as I can replace my hotwater tank to electric, sadly, I will still be forced to continue doing business with Terasen.
Sadly it is safer for the environment for me to switch to electric than to facilitate Kinder Morgan.
I am very troubled at this development."
In return, I received a thank you from Terasen for wanting to discuss this sale, followed by a long-winded diatribe about how great this is, asking me to reconsider.
I then replied:
"Too little, too late.
Sorry, but I wasnt asking you to defend this decision, I was informing you of the consequences."
I encourage individuals to do the same.
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