Last week the Globe and Mail reported that a “debt restructuring” at the largest movie theatre chain in Europe would wipe out a huge investment made by the Alberta Investment Management Corp., which manages Alberta’s public sector investments.
AIMCo, as the Alberta pension fund management company is better known, and the Ontario Municipal Employees Retirement System, the Globe reported, could together see shares in at Vue International Bidco PLC worth $1.4 billion Cdn “cancelled.”
It was not clear from the Globe’s story whether the “debt restructuring” was in fact a bankruptcy, the circumstances in which business reporters would normally use that term.
Nor was it clear whether the shares were cancelled with the two pension management companies’ permission, which would be the normal procedure in such a situation, and thus whether AIMCo and OMERS could expect to receive some compensation.
If the investment was truly to be “wiped out,” as the Globe stated, it would seem they would not, which would be highly unorthodox.
If you ask this former Globe Report on Business reporter, the story created more questions than it answered, but it did make clear that something had gone seriously wrong with a major investment by AIMCo and OMERS, both of which are on the hook for significant losses, and that answers are urgently needed.
This is especially true in the case of AIMCo, which is intended to be the vessel that would carry the Alberta provincial pension plan that Jason Kenney (and Travis Toews, and Danielle Smith, and Brian Jean, and God only knows how many other UCP leadership candidates) dreams of grabbing Albertans’ Canada Pension Plan savings to create.
Accordingly, on Monday, I sent to emails to AIMCo’s media relations staff to ask the following questions:
1) Does the financial restructuring at Vue International Bidco PLC mean that Vue has filed for bankruptcy?
2) The Globe story said Vue was “wiping out” the investments made by AIMCo and OMERS. To me, this would imply that there will be zero compensation for AIMCo. Is this accurate?
3) Did AIMCo (and OMERS) agree to the share cancellation, or was it allowed to proceed without the agreement of shareholders?
4) If AIMCo agreed to the share cancellation, what were the reasons for the agreement?
5) Will there be any financial compensation to AIMCo for the share cancellation?
6) What was AIMCo’s share of that investment?
7) What is AIMCo’s loss expected to be?
The response I have received to these questions is … crickets.
That is to say there was not even an acknowledgement that my email was received.
I don’t feel singled out by this, though. After all, AIMCo didn’t get back to the Globe’s reporter either, at least before he wrote his story. And an AIMCo spokesperson refused to comment to a CBC reporter who followed the story yesterday. As a result, the CBC report cast no light on the dark spots in the Globe’s story.
If AIMCo’s reasoning for not responding to reporters’ questions is the hope that the media will just go away, that doesn’t seem much smarter than some of the corporation’s recent investment decisions.
Indeed, there will likely be more media interest now, seeing as the Opposition NDP’s finance critic, Lethbridge-West MLA Shannon Phillips, yesterday published a statement about whatever is happening at AIMCo with the Vue investment.
“The failure of the Vue investment is another significant loss to Albertans, likely in the neighbourhood of $1 billion,” Ms. Phillips said. “It follows the loss of $2 billion of Albertans’ money due to AIMCo’s failed volatility-based trading strategy.”
“AIMCo has demonstrated clear problems with its risk management approach,” she continued. “It also does not publicly disclose its investments, unlike similar provincial investment funds” – such as the British Columbia Investment Management Corp.
“These losses will affect the pension funds that the UCP forced into management by AIMCo, including the Alberta Teachers Retirement Fund, along with all Albertans through the Heritage Fund,” Ms. Phillips noted.
“This episode proves yet again how dangerous the UCP’s scheme to move Albertans’ CPP contributions into AIMCo management really is, she said, concluding, “the UCP must abandon this reckless gamble with Albertans’ pensions.”
You can say that again!
The UCP does not care one iota who their very bad policies affect, and this includes retirees. The UCP has already had a bad track record with AIMCo. $4 billion of pension money for retirees, is long gone. Very close to $2 billion has been lost from the Heritage Savings Trust Fund. Another undemocratic move by the UCP was when they took teacher’s pensions, without any permission from the them, and placed them into AIMCo. The thing with AIMCo, is it is tied to volatile commodities, like oil. Oil prices are always a roller coaster ride. With AIMCo, unlike CPP, there is a very shabby rate of return. CPP has a better rate of return, by far. The head honcho of the UCP has previous experience making life difficult for retirees. He was a CPC cabinet minister, and we all recall what happened with income trusts. $35 billion of people’s life savings became obliterated, instantly, never to be seen again. If anyone is gullible enough to believe the lies and spin by the UCP, that an Alberta Pension Plan is a fabulous idea, they should think again. An independent Alberta, which is as illogical as it gets, also would make life even more miserable for retirees in Alberta. Their CPP would be gone. The UCP are basically showing exactly how pretend conservatives and Reformers are. They cannot be trusted at all. Imagine if Pierre Poliveire became Prime Minister. He would also compound the suffering for many, including retirees. Pierre Poliveire, and the head honcho of the UCP, have pensions that will be unscathed, after being both lifers in politics, and never having any other type of employment. They won’t face the same fate that others will.
Reverse alchemy. Very adept.
Question. I paid into CANADA pension plan for my working life, NOT Alberta (UCP) gambling fund. What makes the UCP think they can just up a take the CPP funds that my pension is based on?
Roger: This and many like it are good questions. I’m sure the UCP hope is that they’ll succeed in electing a CPC PM in Ottawa, who will give our retirement funds away. What about those of us already receiving or fully portable CPP? Will they try to switch that to the UCP gambling fund, as you put it? What about Albertans who exercise their constitutional right to move to another province. Will they lose their Alberta pension? The questions go on and on. DJC
Your retirement pension is paid based upon where you made your last contribution. So, let’s say you worked in Quebec and contributed to the QPP for X years, then moved to Ontario, contributed to the CPP, then returned to Quebec to work and contribute to QPP again until you retire in Quebec. Ergo, you apply for and receive a Quebec retirement pension payable anywhere in Canada. I assume Alberta wants the pool of premiums as our pop is younger so we’ll have more years before having to pay it out.
Thanks for this Buttery. Another question, then, since you are well informed on this topic. Say you lived and worked your entire life in Alberta, contributing to the CPP. You retire and apply for your CPP, then move to another jurisdiction. Do you continue to receive your pension cheques from the CPP, wherever you may be, or do they suddenly arrive from the APP? I’m sure Alberta would prefer such pensioners to be paid from the CPP, but how would that affect the size of the holdings that got passed to the APP in the event of a breakup? Thanks. DJC
So on the day you retire (ie. made your last contribution) you live in AB and there is no APP, you would have no choice but to apply to CPP.You could chose to defer applying just in case you get bored or broke and decide to resume working. The caveat to all this speculation is that we are using the only model in force: the Canada-Quebec agreement on social security, but who knows what AB would negotiate. And yes, a pension is payable anywhere in Canada.
A recent suicide here has shown the same level of money management as shown by the conservative brain trust slaughtering Alberta.
Virtually every penny given to evangelical product hucksters, or invested in pie in the sky salvation schemes.
The irony is, there was truth in advertising with the evangelical product hucksters.
I live in Alberta and I am drowning in deluded blue scum.
I am always astounded at the “decisions” and “solutions”.
The results have become pretty predictable though.
As a former Royal bank manager I have to wonder what sort of a back room deal these fake conservatives have made? They seem to be too hellbent on forcing Albertans into this destructive deal, aren’t they?
From the CBC story (linked below) it appears the holders of Vue’s debt have been given shares in the company, presumably as an acknowledgement that the company will be unable to meet their debt obligations, a move that probably does not make the debt holders happy either. I assume, then, that the company will continue to operate with new owners.
In a release, the company says its debt holders will get 100 per cent ownership of the company. The deal is expected to wipe £465 million of existing debt from the company’s balance sheet.
https://www.cbc.ca/news/canada/calgary/aimco-vue-entertainment-tim-richards-denes-nemeth-theatre-1.6523986
It isn’t surprising that a cinema company would feel the effects of Covid shutdowns; our own Cineplex tumbled from the $33/share it was trading at before the pandemic to its current $11. As such, Vue’s fortunes are not that surprising.
I wonder if AIMCo/OMERS considered paying off the debt themselves, to retain their shares. While the phrase ‘good money after bad’ comes to mind, it would be a reasonable thing to do if the pandemic were well and truly over, as is acknowledged in the CBC story’s reporting of Vue’s performance recently. Personally I think it shows that the brain trust at AIMCo are acknowledging the need for future shutdowns, even though their politician bosses won’t.
Just another inflammatory anti-Alberta story from the Globe and Mail. What’s important is the investment return as a whole over 5+ years, compared to other investment managers. If AIMCO’s return is consistently below average, that is worth reporting. No wonder AIMCO isn’t responding to this story’s childish and inflammatory questions. I wouldn’t either. Have some self-respect and demonstrate some journalistic responsibility.
Lori, Lori, what planet are you from? There’s nothing remotely inflammatory or anti-Alberta about the Globe story. It’s incompetently written without doubt, parroting a news release that’s intentionally written to obfuscate. As for the five-year-plus investment history, over time AIMCo doesn’t do as well as the CPP, and the risk is higher because it’s a smaller pool. As Leanna Orr of InstitutionalInvestor.com said, “Experts and data put AIMCo on a lower tier of sophistication.” Which is a nice way of saying AIMCo isn’t as competent as the CPP fund’s managers, which certainly sounds right. As for calling out host’s questions childish and inflammatory, I would say your remarks are childish and paranoid. Your faith in the UCP, while unjustified, is charming.
Lori Klingbeil: You might want to delve into the history of AIMCo, and why it’s so bad. Also, you should look at the history of the UCP, and see how they affect retirees, due to their bad policies. AIMCo is a losing prospect, and has a history of being like that, and why are the UCP involved with it? Why are the UCP intent on using it, even after the facts are well known? These pretend conservatives and Reformers don’t help anyone, with their very badly thought out ways of doing things. It appears that Albertans didn’t learn their lesson. It was was this way with Ralph Klein, and other Alberta PC governments who were doing the exact opposite of the things Peter Lougheed was doing. It’s not an anti Alberta story, because it reveals how these pretend conservatives and Reformers are.
Another person unable to read the story presented above, and how AIMCO has been a investment management dud for years. This situation has been discussed for years on this blog, but you pop up out of nowhere spreading manure, completely uninformed and apparently proud of it. Shall we rewrite history because you say so? Not likely. You’re the one with no self-respect or a grasp on reality, not the blog author. You knew that really, but just had to pipe up from the basement, right? Gotta praise the UCP nutbars regardless. But with a concrete block wedged between your ears, it’s no surprise to me.
Educate yourself before you criticize others for getting it right.
I had hoped that changing top management at AIMCo after its previous bout of bad investment would fix things, but it seems maybe not. There is risk involved with investments, but when the losses get into the billions again, it is concerning.
It would also be interesting to know who at AIMCo made these investments decisions. Was it the same person responsible for the decisions leading to both losses, or someone different? We really don’t need a whoops, I did it again investment manager, more transparency would be helpful here. This also leads to doubts that the UCP “fixed” the problems with AIMCo.
I am not sure if the delay in responding to the good questions posed is due to embarrassment or because they don’t yet have all the answers. Perhaps it is some combination of both. In any event this does not inspire confidence for AIMCo to take on managing more investments, does it? As Ricky Ricardo used to say, they’ve got some splainin’ to do.
This is nothing.
Wait until AIMCo invests in the nationalization of Alberta’s fossil fuels and those companies’ assets. Since the term, ‘de-risk’ seems to be the go-to response every time the UCP backs a loser, we should expect to see more of the fantastically crazy things they will put pension monies into.
Considering the investment in VUE is substantial, institutional level, in fact, the managers appear to be weirdly in the dark about what is going on. It’s like they want to forget they even put an insane amount of money into a movie franchise without so much as some kind of assurance from VUE that they will have their heads if they screw this up. But what the hell are pension funds invested in movie theatres for anyway?
I’m looking for hearing more bad news about how AIMCO took a bath investing in the ‘pink sheet’ stocks.
This AIMco thing is almost criminal. Billions of lost dollars and no one held to account? The UCP spin is that it has done great things. Obviously like a gambler that talks about winnings and no mention of losses. I am a pensioner, I get CPP and in 8 years it has gone up over 10%. I also worked for government and get an LAPP a pension with has gone up less than 5% in 9 years. Obviously CPP knows how to treat pensioners better than LAPP. The worst part, like teachers AIMco took over the pension without any say or knowledge of plan participants back in 2013 via Conservatives. This is b***s*** as in the 1990’s the public service pensions were removed from government control since they did not want funds coming from general revenue. These new pension plans were underfunded from the get go, but if you avoid the penalty traps, a reasonable pension is available at the end of the road. It is probably long overdue that the plan members take back control of their pension plans. That may be difficult as long as people fall for the stupidity of the UCP. It is hard to say how it will work for pensioners if the UCP get their way and get an APP, but obviously Alberta pensioners will suffer.
I think I speak for the majority of Albertans when I say, “Keep your fucking hands off my fucking Canada Pension plan , you fucking thieves. Find another place from which to steal money.”
Sorry for the swearing.
Totally agree!
Agree %- including with the swearing!
I do not believe a company can just nullify certain investments. If the pension fund actually received shares, they can only be bought back or dissolved through bankruptcy. It is not easy to divest of shares as every decision needs to go through the exchange.
The bigger question, why do conservatives bitch about the NDP not having budget sense, yet when they again prove that they have no idea how to handle money, not a word. The look-aid must have just the right amount of Special K.
Airshow: I agree, which is why I asked the question that the Globe seemed to have missed. Normally when shares are cancelled, it’s after a bankruptcy, a process governed by legal rules. Debt-holders, in such circumstances, should have the opportunity to approve the restructuring. Despite providing the size of its original investment, AIMCo has been quite opaque about what’s going on. There may well have been some compensation for the cancellation, but AIMCo clearly doesn’t want to tell us what it was. We can only guess at the reasons, but it’s not reassuring when we consider this is the company the UCP wants to manage our retirement benefits instead of the CPP. DJC