The Price of Gasoline in Kazakhstan
One litre is 203.8 tenge, which is 46.8 cents US, 60 cents Canadian, .42 Euro or 35 British P. A year ago a litre of gasoline in Kazakhstan was .40 US cents equivalent.
It seems to me that the price of fuel is not the reason for rioting in Kazakhstan but the Soviet style ruler who will never leave and whose cronies are hoarding cash from the amazing list of Kazakhstan’s riches: oil, coal, iron ore, manganese, chromite, lead, zinc, copper, titanium, bauxite, gold, silver, phosphates, sulphur and uranium.
The per capita GDP is $25,500 (US dollar equivalent), which is richer than Taiwan, Chile and Bulgaria.
CIA World Fact Book on Kazakhstan
Kassym-Jomart Tokayev, the president of Kazakhstan, obviously worries he is about to get the Nicolae and Elena Ceaușescu treatment. You can Google the trial and execution of the Romanian dictator and his wife. Too gruesome to provide a link. Elena didn’t believe it until the last minute.
Kasakhstan subsidizes fuel. As do a lot of countries with lots of oil. In general, the richer the country the more expensive the price of gasoline.
The cheapest gasoline in the world: Venezuela, Iran, Angola, Syria and Algeria. Kazakhstan is number nine in the petrol price sweepstakes.
The most expensive gasoline prices: Israel ($2.11), Finland ($2.13), Norway $2.16), Netherlands ($2.21) and Hong Kong ($2.61).
Link to world gasoline prices.
A New Years Resolution: Upgrade your subscription.
C-3PO where are you?
Nowhere, is the answer.
Hollywood always imagines robots would look like us. They have been made, but what use are they? Better to have parts of us, like our arms and hands, that do specialized things such as build cars or manipulate radioactive material behind a shield.
IFR is an acronym for InternationalFederation of Robotics. It reports that the big three industrial uses of robots are handling, welding and assembling.
Robot density measures the number of robots per 10,000 workers in an indsutry. Korea— the South of course— is number one. Canada is way down in the robot sweepstakes.
Robots are already used in `fulfillment’ warehouses such as those run by Amazon.
Watch You Tube video of robots in Amazon warehouse
Unintended Consequence of Electric Car Subsidy in Quebec
Buy an electric car in Quebec and you get C$8,000 from the province and another C$5,000 from the federal government, if the car isn’t too pricey. Neighbouring Ontario killed its electric car subsidy a few years ago. Now it seems it pays to buy a new Tesla in Quebec, helped by the subsidy, and then re-sell the car in Ontario, which in some cases is less than kilometre away across the Ottawa River.
It helps that used Tesla Model 3 prices are in many case higher than the new price, in part because the wait time is so long. The Montreal online newspaper La Presse reporting that one man they spoke to boasted of driving his Tesla Model 3 for free for two years after he sold it used to an Ontario buyer.
The Smart Way to Encourage Covid Vaccinations
The Quebec government announced that government run wine and booze stores will demand proof of Covid vaccinations. No jab, no booze. Ditto for Cannabis stores.
Result: vaccination rates jumped.
Essay of the Week
This week the Blackberry stopped working. It reminded me of a book I wrote for a Toronto Law Firm, Wildeboer Dellelce, in 2018. They were only three years old when they landed the Research in Motion (RIM) underwriting deal. Many of the partners kept on using the Blackberry out of loyalty, though they carried newer smartphones too. Here is an edited version of the story of the firm and RIM, the Blackberry inventors.
1995
The Start of the RIM Years
Research in Motion existed long before the president of the United States, Barack Obama, threw a tantrum in 2008 and insisted he just had to keep his BlackBerry.
Wildeboer Dellelce had been involved with RIM since 1995, just as it was about start its run to become a world technology leader from the unlikely base of Waterloo, Ontario.
RIM was founded in 1984; one of its two founders was Mike Lazaridis, a young engineering graduate from the University of Waterloo. The company did not set out to invent the BlackBerry, the device evolved as they dabbled in one successful innovation after another. RIM won an Emmy and a technical achievement award from the Academy Awards for a product called the DigiSync film reader, which cut down on editing time.
Jim Balsillie, a thirty-three-year-old graduate of Harvard Business School, invested $250,000 in RIM in 1994; he had been hired two years earlier. From then on Balsillie and Lazaridis became the public image and driving force behind Research in Motion. Eric Apps and Rob Wildeboer were the initial contacts and they worked on a bought deal special warrant financing, prior to RIM’s initial public offering.
The big action with RIM started in 1996, but Wildeboer Dellelce had its foot in the door, through contacts with investment banks such as Midland Walwyn, Yorkton Securities, and Griffiths McBurney (later named GMP). Rob Wildeboer remembers the first contacts came in 1995, before any deals were done.
“We probably did more special warrant transactions than anyone in the space in Canada at that time. So, I got a call from each of the three to do a ‘bought deal letter’ for this company called Research in Motion over a period of about a year,” says Rob Wildeboer, looking back on a relationship that helped launch the young firm into the big time.
Special warrants of a company that were issued before its IPO were particularly attractive to investors. “When the company went public and issued new shares, everything that was a special warrant could convert to shares and would be freely tradeable,” explains Rob Wildeboer. “Now you don’t need to do that, but it used to be if you didn’t have that you were locked up for twelve months after the company went public. So that’s why the special warrants were such a cool structure.”
Wildeboer Dellelce wrote RIM’s first three prospectuses and raised $15 million on the first private placement special warrant offer.
“The deal Perry, Eric and I had with the underwriters was ‘we’ll do the bought deal letter for free,’” says Rob Wildeboer.
“That way we weren’t charging them and we weren’t disqualifying ourselves because every dealer in the world wants to throw in a bought deal letter but it doesn’t mean they’re going to lead the deal. If you lead the deal, you pick the counsel. So, what we said is ‘we’ll do the engagement letter for free’ and if you get the lead we want to be the counsel. So, you’re using us because we have the knowledge of all the paper. We had done a lot of tech deals at the time and we knew a lot of people.”
Two of the people the lawyers at Wildeboer Dellelce got to know around this time were Gene McBurney and Scott Paterson, two young investment bankers in Toronto.
Gene McBurney left the practice of law to start an investment firm, which morphed into Griffiths McBurney and is now GMP. He met Perry Dellelce through Scott Paterson.
“We were going to do a financing for a company in Waterloo called Research In Motion, which is now BlackBerry. Brad referred Rob [Wildeboer] to the management team, Jim Balsillie, at RIM. They got RIM through Griffiths McBurney. We used them on some other files acting for us on financing transactions and things like that,” says Gene, now chairman of GMP, which operates in Canada, the U.S., Europe, the Caribbean and South America.
There is another version of the story, told by Rob Wildeboer. At a meeting in Waterloo with GMP in the room, the investment firm said it was going to use Wildeboer for a RIM financing. That was in 1996 and the full details are in the next chapter.
Rob Wildeboer provided the following synopsis of the RIM deals:
“The first special warrant deal was $35.7 million, including $34 million for the company, at $3.40, the largest special warrant financing in Canada to that time. It closed in June 1996. With the splits of 2:1 and 3:1, that is 57 cents today, so BlackBerry still today is about a 25-bagger.
“The IPO was at $7.25, raising $115 million, which closed in October 1997. We did some other equity deals, but the biggie was $612 million US, or close to a billion Canadian, in October 2000. That was a biggie and a spectacular deal as we got the deal done in roiling markets. Rob Wortzman was fantastic at getting early OSC clearance, so we could sell the shares at $153. The following week the market had been tanking and the stock price was $118. So we saved RIM something like $150 million. I talked to Dennis about a percentage fee, and sent a blank bill to Dennis and Jim and say pay us what you think is fair. They paid us a great premium and offered to support our office in Waterloo with referrals and support work, which they did. We never did a debt financing with RIM, all equity.”
1996
RIM Goes Public
Jim Balsillie wanted Wildeboer Dellelce, and the three-year-old law firm wanted RIM. In many ways the two were looking in the mirror: RIM was cool, hip, and filled with young talent. Ditto for Wildeboer Dellelce.
In 1996 Research in Motion introduced its most revolutionary product to date: the RIM-900. It was also called the Inter@ctive Pager, and it allowed users to send messages over the Internet on a secure, wireless, data network called Mobitex.
Remember, this was an era when few people understood the Internet. At the start of 1996, there were just sixteen million people on the Internet, in the world. That number would more than double in the next twelve months. Today there are four billion, from the richest countries to the poorest.
In 1996, RIM’s pager was the ultimate in cool. One of its distinguishing features was the QWERTY keyboard, which allowed users to type in messages quickly. They soon got used to using their thumbs. Sending a text message using the keypad on a mobile telephone — available since 1992 — was awkward and time-consuming.
Wildeboer Dellelce had already done several bought deals acting for investment dealers. The young firm was about to step up the pace.
“I got a call after doing the RIM bought deal letter for GMP from Rob Fraser,” remembers Rob Wildeboer. “He said, ‘I’ve been talking with the guys at RIM, and they don’t want you to work on this deal for us, they want to meet you, and you should go up there and meet them.’ I said okay. This was on a Tuesday.”
Rob and Eric Apps were the team that first worked on the RIM account.
After a call to Dennis Kavelman, the young Chief Financial Officer of RIM, Wildeboer and Apps drove up to Waterloo to be at a meeting early on Wednesday morning. In the room with them was the “Troika” who masterminded RIM’s ascent to glory.
Mike Lazaridis was the brains behind RIM’s technological wonders and a man who kept a scientific scale in his office to weigh the innards of his inventions against the competition, such as the Palm Pilot. The Troika’s other members were Jim Balsillie, the talented dealmaker, who was stepping up RIM’s game in capital markets; and Dennis Kavelman, the bright young CFO. Both Eric and Rob came away from the meeting even more impressed with the team at RIM.
“As we were driving back, I remember saying to Eric, ‘This, in my mind, is a game-changer.’ We just sat down in the same room with the smartest people that I’ve ever seen. Lazaridis was a technical guy, but Dennis and Balsillie were just as bright. Lazaridis could make the stuff technically but Jim was the strategic thinker and Dennis, in my view, was the glue that kept them together as they were thinking of things,” says Rob.
Eric Apps remembers that around this time two upstarts, Yorkton Securities and Griffiths McBurney, were competing with a more old-line brokerage house, Midland Walwyn, to be the lead on any RIM financing. Everyone could see this was a company that was going places.
“They were all pitching to the RIM guys, who finally decided to go with Griffiths. Then the RIM team asked Griffiths who they were going to use as their lawyers and Rob Fraser said they were going to use Wildeboer Apps and Jim Balsillie said ‘No, we are going to use those guys, you’re going to have to find someone else.’”
Eventually Wildeboer Dellelce was officially hired as RIM’s law firm. Rob Wildeboer recalls the meeting, that ended with a financial windfall for every lawyer at the firm.
“I went up to Waterloo, and I was in a meeting room with Jim Balsillie to my left, Rob Fraser (of Griffiths McBurney) to my right, Dennis Kavelman on the other side and Jim said to me, “Can I sign this letter?” I stated that I had written it for Rob, but it’s standard so, yeah, sure. He signed it, and he then said, ‘Okay, you’re my lawyer now so is there anything we can do for you?’ I replied yes, the firm wanted to buy a unit of stock, which was $151,000, and he said: ‘Done.’”
The underwriter, Rob Fraser, said Balsillie couldn’t do that because the deal was oversubscribed and it’s got to go to the clients he promised it to. Fraser said he couldn’t even buy any for his own account.
Jim Balsillie looked at him and said, “He’s my lawyer, and it’s my call.”
It was a gamble: that $151,000 would be about $225,000 in 2018 dollars, according to the Bank of Canada’s inflation calculator.
“I drove back to the office, and this was the entrepreneurial nature of our firm: I said okay, we have to talk because I’ve just committed to buying a unit of this stock, of this company that we’ve been talking about,” says Rob Wildeboer.
“The first question from my partners was, ‘You did what?’ Then ‘Do you think it’s a good buy?’ I replied that if they didn’t take it, I’d put a mortgage on my house and take it all.” That burst of bravado convinced them. They were in. The seven lawyers at the firm each got one-seventh of that $151,000.
When RIM went public, the shares were worth $3.40, and since that time they have split two for one and three for one, so the equivalent was about fifty-six cents. “Even today it’s up twenty-five times,” said Rob in 2017. “But if we had held the stock forever it would be up two hundred times. We all did pretty well out of it, and it’s a great story.”
Many of the partners sold their shares when they doubled. Eric Apps hung on longer than most. “I think I sold at around $20, thinking I was a very clever guy,” says Eric with a self-deprecating laugh.
Carol Doty made the biggest percentage gain. The long-time personal assistant and employee number one hung on to almost every share she ever acquired during her twenty-odd years at Wildeboer Dellelce, maybe out of a sense of loyalty. She didn’t want to seem rude by selling. It paid off.
“I had a hundred shares of RIM, and I sold them for $168 a share, and they didn’t cost me anything: Rob (Wildeboer) gave them to me as a gift,” says Carol. There were other shares she acquired while working at Wildeboer Dellelce that she held on to as well. “I just sold Aecon and Martinrea recently,” she said in the summer of 2017.
Guest Essay
The following is by Tony Rotherham, a retried forester, who lives in Knowlton and writes for Tempo Lac Brome, a monthly paper where I am the volunteer editor.
Forests and Climate Change – Carbon Sequestration, Fires and Insects
Our old pasture lands that will never again provide grazing for cattle are gradually reverting to forest. But it is a slow process. The Federal Gov’t has a “2 Billion Tree” program designed to plant millions of trees to increase the size of our forests and fight Climate Change.
As trees grow they absorb (sequester) carbon dioxide from the atmosphere, build the carbon into the wood and emit the oxygen back into the air. This helps to reduce the volume of Greenhouse Gas (GHG) in the atmosphere and fight Climate Change. Plantations of spruce and pine grow at a rate of 10-15 cubic metres of wood per hectare each year. Each cubic metre of solid wood holds about the same amount of carbon emitted by burning 270 litres of fuel in your car.
After 30-40yrs of growth the trees are ready for harvest and the logs are delivered to local sawmills, sawn into lumber and used to build houses. The wood and carbon is then kept in long-term storage for the life of the building.
Climate Change can affect forests in at least two ways
Global warming might increase the incidence and severity of forest fires or the area damaged by insect epidemics.
In Canada annual loss to forest fires varies dramatically depending on the weather. 1978 was a good year- only about 300,000 ha were lost to fire. 1995 was a bad year - 7.4 million ha burned. Using annual losses to judge the effects of climate change can be deceptive. Long term trends are a better measure of the impacts of Climate Change. The average loss during the 10-year period 2000-2009 was 1.75 million ha. Between 2010 and 2019 the average loss was 2.9 million ha. Significantly higher, but one very bad year can have a big effect on the trendline.
Long-term warming trends also increase the risk of damage by insect pests. The population and range of forest insects is controlled by low winter temperatures. If cold kills most of the over-wintering insects, the population is effectively controlled at levels which are not dangerous. The evidence shows that the ranges of some insects are expanding northwards and the devastating epidemic of Mountain Pine Beetle in BC was due to winters that no longer have regular periods of -40C to kill the over-wintering insects. The result? Most Lodgepole Pine were killed on about 14 million ha of mixed forest in the Interior of BC.