After the recession: Canadian companies' lower debt levels and stronger cash
balances leave them well positioned for acquisitions: PwC report

Energy and materials industries well capitalized and will lead expansion

TORONTO, April 29 /CNW/ - A PricewaterhouseCoopers (PwC) review of debt levels of Canadian companies from 2007-2009 shows that the forestry, industrials and media/technology sectors fared the worse during the lowest period of the global recession.

More than other industries, this triad was most affected by difficulty in securing refinancing as cash balances dropped and debt-loads rose. Not surprisingly, many companies in these sectors struggled to service debt and as a result, in 2009 they had the worst default experience.

"While companies in the industrial, forestry and media/telecom sectors faced significant financing challenges from 2007-2009, the energy and materials companies weathered the recession well and are poised for merger activity and can tap into public equity and debt markets to strengthen their 'war chests,'" says Kristian Knibutat, national deals leader for PwC.

"Overall Canadian companies did well in riding out the recession compared to their global counterparts and with their lower debt levels and cash in hand, now is a good opportunity for acquisitions within Canada and abroad," Knibutat adds.

The PwC Capital Markets Flash report predicts that energy and materials companies will take advantage of their buoyant situation to focus more efforts to:

    -   Re-examine capital expenditure budgets to increase organic investment
        while resuming new halted projects

    -   Engage in opportunistic mergers and acquisitions to secure production
        ahead of expected future price strengthening

    -   Tap public equity and debt markets to further strengthen cash "war

    -   Revisit share buybacks and dividend policies

Notable debt defaults in the forestry, industrials and media/telecom sectors include Nortel Networks ($5.2 billion), Canwest Media ($3.5 billion), Abitibi-Consolidated ($4.6 billion), Cinram International ($1 billion), Abitibi-Bowater ($423 million), Fraser Papers ($28 million) and Grant Forest Products ($636 million).

The report notes that Canadian corporate leverage was at a 17-year low at the height of the credit bubble. "This relatively low leverage helped Canadian companies weather the economic downturn. Some firms were even well positioned to capitalize on opportunities presented by the recession."

PwC's Capital Markets Flash is produced every two weeks on featured topics. This issue on corporate deleveraging suggests that with the economic recovery well underway, governments and corporations will start the process of shedding excess leverage and restoring liquidity. The 13-page report, including six trending graphs and tables, is available on request.

For more information, please visit

About PricewaterhouseCoopers LLP

PricewaterhouseCoopers ( provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP ( and its related entities have more than 5,300 partners and staff in offices across the country.

"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.


For further information: For further information: David Rowney, (416) 365-8858,; Kiran Chauhan, (416) 947-8983,

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