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USA: "Michigan’s Worsening Eight-Year Depression" Exec Summary

USA: "Michigan’s Worsening Eight-Year Depression: Paying the Price for -$1 Trillion in US Auto-Trade Losses " Exec Summary.

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backAMERItalk June, 2012

IPO INSIGHT: O Canada: Going Public Above the 49th Parallel

Between holding up through the global economic crisis, and touting the world's most stable and safest banking system, True North has been attracting more U.S. companies to its Toronto Stock Exchange.

The Canadian marketplace is growing, and the doors to the Toronto Stock Exchange (TSX) are wide open to U.S.-based companies ready to take on the capital market. To be sure, the U.S. IPO market is also open. Witness the successful public debuts of Yelp Inc (NYSE: YELP), Roundy's Inc (NYSE: RNDY) and Millennial Media (NYSE: MM).

But not every IPO hopeful has prospered. The Miami, Fla.,-based wireless products distributor Brightstar Corporation, and the Lenexa, Kan.,-based equities and options exchange operator Bats Global Markets did not have it so lucky and had to shelve their IPO plans. For whatever the reason: volatile markets, a glitch in the trading system, or just not being big enough, U.S. companies may have better luck at using the TSX as a stepping stone to access the capital market. Canada prides itself on the fact that it has managed to hold up through the global economic crisis. The country is also considered to have the world's most stable and safest banking system.

Some little-known facts: not one bank collapsed in Canada during the economic downturn, and 50 percent of Canadians own stocks in publicly-traded companies. As of December 31, there were 23 U.S.-based companies that went public on the TSX, which collectively raised $1.3 billion.

In total, there are 172 U.S. companies that are trading on the TSX and the TSX Venture Exchange including Atlantic Power (TSX: ATP), SXC Health Solutions Corp. (TSX: SXC), and Tahoe Resources Inc. (TSX: THO). U.S. companies can start to trade on the Canadian stock exchange by a reverse merger or through a special purpose acquisition corporation (SPAC).

Companies can also go through as a capital pool company (CPC), a program that launched in 1987 and is offered exclusively by the TSX Venture Exchange. The CPC program allows small to medium-sized companies to get public financing without having the characteristics of a traditional IPO candidate. The program also allows a newly-formed company that only has cash, meaning no commercial operations or assets, to carry out an IPO just so it can raise start-up capital and list its securities to trade on the TSX Venture Exchange as a CPC.

The Foreign Asset Investment Trust (FAIT), a publicly-traded Canadian income trust which is designed specifically for U.S. investments, is another gateway for American companies to trade on the Canadian stock market. Companies have a shorter timeline to access the IPO market. It can take up to six months from the time the company has its planning meeting to the day it lists on the TSX. Companies that are successful will have the flexibility to solely focus on sustainable distribution efforts, and growing the company through acquisitions.

However, the grass isn't always greener on the other side. The process of a cross-boarder IPO can get complex. While it may appear to be an easier process, becoming a public company in Canada has additional expenses and IPO hopefuls will need to make sure to have free distributable cash flow on hand. From listing fees, accounting, auditing, legal fees and commission for underwriters, going public on the TSX can cost a medium-sized company between $500,000 to over $1 million.

Source: Mergers & Acquisitions - GAI

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