On December 20, 2019, Canada Development Investment Corporation (“CDEV”), on behalf of the Government of Canada, completed the sale of 90 per cent of Canada’s shares in Ridley Terminals Inc. (“RTI”) to 1210565 B.C. Ltd. (a joint venture of two US private equity firms – AMCI Group and Riverstone Holdings), and the concurrent transfer of 10 per cent of the shares of RTI to Coast Tshimshian RTI Holdings Limited Partnership, a limited partnership owned by the Lax Kw’alaams Band and the Metlakatla First Nation. The sale price was $350 million.
The transaction is the first Canadian privatization where local First Nations obtained an equity interest as part of the disposition. The First Nation participation will position the RTI transaction as one of the most important for 2019 and have lasting significance for comparable transactions in the future.
The transaction resulted in one of the first joint ventures between US private equity and First Nations. Given the uncertainties associated with acquisitions of infrastructure, project and natural resource-based assets in Canada, this transaction can be used as a model of how to manage and structure similar private-sector acquisitions.
Privatizing a Crown asset is a complicated process involving many stakeholders. In addition to M&A skills, the Fasken team was able to utilize its experience with Crown agencies and other governmental bodies, indigenous law, international trade, among others.
The transaction was particularly intricate and involved:
- The passage of enabling legislation by Parliament in order to authorize the sales process.
- A consultation process with the Tsimshian First Nations.
- Discussions leading to CDEV structuring the sale to provide for direct, joint participation by the Lax Kw’alaams Band and the Metlakatla First Nation, who now have a 10 per cent equity interest in RTI.
- After the First Nation interest was structured, CDEV was able proceed with an auction sale process for the 90 per cent interest in RTI.
Fasken Martineau DuMoulin LLP advised CDEV on behalf of the Government, with a team led by Kareen Zimmer (sale transaction) and Paul Wilson (First Nation transactions). The team also included Don Dalik, Dierk Ullrich, Amy Carruthers, Enoch Chang, Marcus Turner, Clara Rozee, Matthew Jensen (M&A), Zach Romano, Stephanie Sanger, Mary Walsh (First Nations and environmental), Ian Cassie (real estate), Anthony Baldanza, Chris Margison, Jenna Ward, Justine Reisler (competition), Clifford Sosnow (international trade), Lorene Novakowski (privacy), Clayton Jones, Ross Gaucho, Matt Larsen (employment and benefits) and Michael Coburn (tax).
McCarthy Tétrault LLP acted for the Purchaser with a team led by Robin Mahood (M&A). The team also included Oliver Borgers and Jonathan Bitran (competition), Stephen Curran and Liezl Behm (debt financing), Michael Alty (M&A), Robert Nearing (tax), Donovan Plomp and Abigail Cheung (employment) and Patrick Beechinor (real property).
Borden Ladner Gervais LLP advised RTI.
Stikeman Elliott LLP advised the Lax Kw’alaams Band and the Metlakatla First Nation.
Goodmans LLP acted for the lenders in respect of the acquisition financing provided to the Purchaser by certain funds and affiliates of Brookfield Asset Management. The team included Dan Dedic, Evita Ferreira (financing), Sheldon Freeman (corporate/M&A), Michael Koch (regulatory), Kenneth Saddington (tax) and John Alton (pensions).
Lawson Lundell LLP acted as Brookfield’s local counsel in British Columbia, with a team that included Mandeep Dhaliwal, Daniel Mowat-Rose, Chat Ortved, Chad Travis, Cliff Proudfoot, QC and Mona Ying.