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Fiat Chrysler calls GM's bribery allegations 'preposterous'

Chrysler accused of bribery

Allegations by General Motors that Fiat Chrysler Automobiles bribed union officials are “preposterous” and read like a script from a “third-rate spy movie,” FCA lawyers wrote in court documents filed Monday.

GM, in a court motion last week, alleged that Fiat Chrysler used foreign bank accounts to bribe union officials so they would stick GM with higher labour costs.

But in a response, the Italian-American automaker fired back, calling GM’s claims “defamatory and baseless.”

GM alleged in a court filing last week that FCA spent millions on bribes by stashing the money in foreign accounts. The allegations of new evidence were made in a motion asking a federal judge to reconsider his July dismissal of a federal racketeering lawsuit against Fiat Chrysler.

In trying to revive the lawsuit, GM alleged that bribes were paid to two former United Auto Workers presidents, as well as a former union vice-president and at least one former GM employee.

In its response, Fiat Chrysler said GM has to know that the prospect of getting the judge to overturn the dismissal is slim to none. “So this motion is apparently a vehicle to make more defamatory and baseless accusations about a competitor that is winning in the marketplace.”

FCA denied allegations by GM that FCA paid two “moles” to infiltrate GM and send inside information. The company also denied that foreign bank accounts were involved. “That GM has extended its attacks to individual FCA officers and employees, making wild allegations against them without a shred of factual support, is despicable,” FCA lawyers wrote.

GM's claims are based on the alleged existence of foreign bank accounts, which are legal, Fiat Chrysler wrote. “There is not one well-pled allegation in the proposed amended complaint (by GM) that these foreign bank accounts were used to pay bribes or facilitate any other illegal conduct,” FCA's response said.

GM contends that bribes were paid to former United Auto Workers Presidents Dennis Williams and Ron Gettelfinger, as well as Vice-President Joe Ashton. It also alleges money was paid to GM employees including Al Iacobelli, a former FCA labour negotiator who was hired and later released by GM.

GM alleges that payments were made so the officials would saddle GM with more than $1 billion in additional labour costs.

Gettelfinger, whose name had not come up previously in a wide-ranging federal probe of UAW corruption, vehemently denied the allegations in a statement and said he had no foreign accounts. Williams’ California home was raided by federal agents but he has not been charged. Iacobelli, who is awaiting sentencing in the probe, also denied the claims.

In July, U.S. District Judge Paul Borman in Detroit tossed out GM’s lawsuit that alleged that Fiat Chrysler paid off union leaders to get better contract terms than GM.

He wrote that GM’s alleged injuries were not caused by FCA violating federal racketeering laws, and that the people harmed by the bribery scheme were Fiat Chrysler workers.

GM’s motion contended that payments were made to accounts in places like Switzerland, Luxembourg, Italy, Singapore and the Cayman Islands. The accounts were set up to avoid detection in the federal criminal probe, according to the motion. The accounts were discovered recently by private investigators working on GM’s behalf, according to court records.





Dockworkers launch port strike in Montreal, shutting down terminals

Dockworkers strike

Dockworkers at the Port of Montreal launched a strike Monday morning.

The longshore worker's union failed to reach an agreement with the Maritime Employers Association despite discussions that continued until 1 a.m.

The union says the port-wide strike relates to scheduling and wage conditions.

The employers association says it believes the solution lies in a truce that would result in binding arbitration if no agreement is reached after two months.

The strike, which kicked off at 7 a.m., shut down activity at Canada's second-largest port with the exception of grain transport and shipments to Newfoundland and Labrador.

The labour action by more than 1,100 longshore workers, who have been without a collective agreement for nearly two years, comes after a series of temporary strikes by the Canadian Union of Public Employees over the past six weeks saw several ships diverted ports in Halifax, New York City and Saint John, N.B.



McDonald's sues ousted CEO, alleging employee relationships

McDonald's sues ex-CEO

McDonald’s says it's suing Stephen Easterbrook, the CEO it ousted last year over an inappropriate relationship with an employee, alleging Monday that he covered up relationships with other employees and destroyed evidence.

Easterbrook, according to a lawsuit, approved a special grant of restricted stock, worth hundreds of thousands of dollars to one of those employees.

The company now wants to reclaim hundreds of thousands of dollars in compensation paid to Easterbrook on his departure.

McDonald’s fired Easterbrook last November after he acknowledged exchanging videos and text messages in a non-physical, consensual relationship with an employee. Easterbrook told the company that there were no other similar instances.

Based on what the company knew at the time, McDonald’s board approved a separation agreement “without cause” that allowed Easterbrook to keep nearly $42 million in stock-based benefits, according to Equilar, which tracks executive compensation. Easterbrook also collected 26 weeks of pay, amounting to compensation of about $670,000.

McDonald’s says in a lawsuit that in July, it became aware of sexual relationships between Easterbrook and three other employees prior to his termination. The company said Monday that Easterbrook removed evidence of those relationships — including sexually explicit photos and videos sent from corporate email accounts — from his cellphone, preventing investigators from learning about them prior to his firing.

In a lawsuit filed in Delaware, McDonald’s said it would not have terminated Easterbrook without cause if it had known of the additional relationships.

McDonald’s is now attempting to block Easterbrook from exercising his stock options and said it will seek compensatory damages.

Easterbrook could not immediately be reached for comment early Monday.



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Cannabis company Canopy Growth reports $128.3M Q1 loss

Canopy's $128.3M loss

Canopy Growth Corp. reported a net loss of $128.3 million in its latest quarter compared with a net loss of $194.1 million in the same quarter last year.

The cannabis producer and retailer says the loss amounted to 30 cents per diluted share for the quarter ended June 30 compared with a loss of 54 cents per share in the same quarter a year ago.

Net revenue in what was the first quarter of Canopy's 2021 financial year totalled $110.4 million, up from $90.5 million a year ago.

Canopy, which is behind brands including Tweed and Tokyo Smoke, says the increased revenue was due to higher medical cannabis sales in Canada and Germany, strong vaporizer sales and the benefit of a full quarter of contribution from a pair of acquisitions.

It says the growth was partially offset by a decline in Canadian recreational cannabis sales due to the COVID-19 pandemic and increased competition in dried flower-based products.

Canopy has cut more than 18 per cent of its workforce since the start of the calendar year in a move to reduce costs.



Ontario's pot store lottery winners sell shops as more consolidation expected

Pot store lottery winner sells

More than a year after winning the chance to open one of Ontario's first cannabis stores through a provincial lottery, Lisa Bigioni has walked away from her Niagara Falls pot shop.

The store had become like a second home and it was painful to leave, but Bigioni wanted to make good on a deal she signed with a large cannabis brand that helped get her shop up and running under the tight deadlines set by the province.

"(Choom Holdings Inc.) offered a whole bunch of expertise that I needed after the lottery, but then in exchange for that, they said, 'we'd like to buy your store when the time is right.' The time came and there was a great deal on the table, so here we are," said Bigioni, who sold to the Vancouver-based company in April for $2 million in cash and $2 million in common shares.

She's using the proceeds to open her own Stok'd cannabis store chain.

The Alcohol and Gaming Corporation of Ontario, which oversees cannabis retailers, couldn't say how many of the first lottery store winners are still associated with the shops they opened, but The Canadian Press has counted several that have changed hands — and experts say more are likely to follow.

Such sales are being replicated by several of Bigioni’s 24 fellow lottery victors from round one, who were not allowed to sell their stores until last December, and 42 from a subsequent lottery.

Fire and Flower has already scooped up two stores in Kingston and Ottawa, High Tide landed two in Sudbury and Hamilton and Canopy Growth Corp. got in on the action too.

Cannabis retail licences held by lottery winners technically cannot be transferred, but the stores can be taken over by new owners if the buyer applies for and is granted a new licence and authorization to operate the location.

For many of the lottery winners, selling is a no-brainer.

With one transaction they can make millions and rid themselves of the challenges of supply and security, regulatory changes and general hiccups that have come with owning a business in a newly legal sector.

The cannabis companies clamouring for the properties have a lot to gain too.

Many are battling it out across Canada to grab as much of the bricks-and-mortar market as they can. Stores already operating are ideal because they have some name recognition with consumers and save buyers the time and headaches associated with building from scratch.

"It's certainly attractive on both ends," said Melissa Gallagher, Canopy Growth's director of franchising.

Canopy-backed Tokyo Smoke signed a deal in May with lottery winner Christopher Comrie, who operated Central Cannabis in London, Ont., but was based in Toronto.

Tokyo kept Comrie's staff through an agreement, but chose to switch up the store's branding and layout.

"The entire process probably took about three weeks in total, and required us to close only for one day, which ended up being a holiday, so it worked out quite well," said Gallagher.

The experience was so positive that she says taking over more properties from lottery winners "is not off the table," especially as Tokyo looks to "aggressively" expand.

However, not everyone is in the selling mood.

Hunny Gawri, a realtor who runs the Hunny Pot Cannabis Co. store in downtown Toronto, is keeping his business. He remembers having to turn his phone off after winning a licence in the lottery because so many cannabis brands wanted to partner with him with the potential to buy later.

"A lot of people won the lottery without the resources or the skillset to be able to execute on it and there was a lot of people that were chomping at the bit that had laid the groundwork to be able to roll out a retail chain or were already doing it on the West Coast," recalled Hunny Pot spokesman Cameron Brown.

"But striking a deal and going with these other brands was not really what Hunny wanted to accomplish."

So Gawri stuck with his first store and added another five across Canada — all run without partnering with a bigger player.

Brown believes the next six months will be interesting for cannabis retail in the province.

The AGCO said it has received 1,066 retail operator licence applications and 892 retail store authorizations — both necessary for opening a cannabis store. So far, 116 stores have opened across the province.

Some shops just won't open because of the length of the approval process and the costs and challenges of running a store, said Brown.

Others, he predicted, will close.

Corey Gillon, the chief executive of Choom, believes Ontario will still see deals like the one he struck with Bigioni, who was a director at the University of Toronto before getting into the cannabis business.

Choom hasn't bought properties from Bigioni's fellow winners or from the winners of a second lottery because Gillon said some of the numbers being tossed around have not made sense from a payback or performance perspective.

He believes opening stores from scratch is the best model for Choom overall, but still said, "we're going to see consolidation in the space.

Brands with several stores may look to expand their footprint by reaching deals with people who only own one or two shops, he said.

"I think there are opportunities and people are already realizing that."



Scott Moe worried U.S. could put tariff on steel as well

Worry tariffs could expand

Saskatchewan's premier says he's concerned the United States could impose a tariff on Canadian steel after the country slapped a 10 per cent import tax on aluminum.

Scott Moe says the issue of tariffs has come up during regular calls with other premiers.

U.S. President Donald Trump announced Thursday a 10 per cent tariff was being reimposed on raw aluminum coming from Canada.

In response, Ottawa announced it would retaliate by levying $3.6-billion in import tariffs on American products made with aluminum.

In 2018, the U.S. put a 10 per cent tariff on Canadian aluminum and a 25 per cent tariff on steel which weren't lifted until 2019.

Regina is home to the Evraz steel mill where hundreds of people work.

"From a Saskatchewan perspective, very concerned that it could extend to steel," Moe told The Canadian Press Friday.

Moe's worry was echoed by Ontario Premier Doug Ford, who chastised Trump for going after Canada, a close U.S. trading ally.



Domtar launches strategic review of personal care business after nine years

Domtar launches review

Domtar Corp. is launching a strategic review of its personal care business, nine years after launching the diaper and incontinence operations.

The forest products company says it is exploring "a range of value-creating alternatives," which include a sale of the business.

Chief executive John Williams said Domtar has significantly improved the operating structure and cost profile over the past year.

“In addition, the scale-up of new customer and sales pipeline gives us confidence in the long-term prospects for the business,” he said in a statement.

“With this positive momentum, we believe now is the right time to initiate a strategic review.”

Domtar also says it will close and repurpose several U.S. facilities, affecting about 780 employees, as it looks to cut US$200 million in annual costs by the end of 2021.

It will permanently stop producing uncoated freesheet paper — used in office copiers and printers — in Tennessee, Michigan and Arkansas.

Repurposing the mill in Kingsport, Tenn., is the first step building a large and cost-competitive business, Williams said.

Domtar plans to enter the linerboard market with the conversion of the paper machine in Kingsport, Tenn., to produce about 600,000 annual tons of product used for cardboard boxes by early 2023. The conversion is expected to cost US$300 million to US$350 million and make the mill among the lowest cost operations in North America. It will directly employ about 160 workers.

"Kingsport is well-positioned to be the go-to supplier to independent converters for quality, service and innovation as the mill is less than a day’s drive from over 60 customers representing an addressable 3.9 million tons of annual containerboard demand."

It will also complete the conversion of the Ashdown, Ark., mill to softwood and fluff pulp over the next 12 to 14 months.

“We have been proactive in reducing risk and safeguarding our ability to weather the current crisis. We are taking the appropriate steps to optimize our operations and to remain an agile, reliable partner to our customers,” Williams added.

The company expects that the overall environment will continue to be challenging with paper demand continuing to be weak with some recovery in the third and fourth quarters.

The South Carolina-based company says it earned US$19 million or 34 cents per diluted share in the second quarter, up from US$18 million or 28 cents per share a year earlier.

Adjusted profits decreased 44 per cent to US$20 million or 36 cents per share, from US$36 million or 57 cents per share in the second quarter of 2019.

Revenues for the three months ended June 39 decreased 2.1 per cent to US$1.01 billion.

Domtar was expected to lose 49 cents per share on $1.04 billion of revenues, according to financial markets data firm Refinitiv.

Paul Quinn of RBC Dominion Securities said the results were well above expectations, largely driven by results from paper and pulp segments.

He said the mill conversion in Arkansas was expected given the weakness in paper markets.

"We view the Ashdown conversion as a 'slam dunk,' while the entry into containerboard could make some investors nervous. The reduction in (uncoated free sheet) capacity (about 721,000 tons) should help to support markets in the medium-term."

Investors responded warmly to Friday's results and corporate announcement, sending Domtar's shares up 23.4 per cent or C$7.01 at $36.98 in afternoon trading on the Toronto Stock Exchange.



Four more workers test positive for COVID-19 at Manitoba pork plant

Four more test positive

A union representing workers at a meat-processing plant in Manitoba says four more employees have tested positive for COVID-19.

A total of eight employees at the Maple Leaf pork plant in Brandon have now tested positive since the weekend.

Jeff Traeger, president of the United Food and Commercial Workers Local 832, says he expects the number to continue to increase.

The union, which represents nearly 2,000 workers at the plant, is renewing its call to have the company halt production there until the situation is under control.

Maple Leaf has said the cases are not linked to workplace spread but to an outbreak in the community.

Public health and workplace safety authorities inspected the plant Thursday, and the company says the results support its decision to continue operations.



Interfor earns $3.2 million in second quarter on lower revenues

Interfor earns $3.2M in Q2

Interfor Corp. says it earned $3.2 million in profits in its latest quarter despite lower revenues.

The Vancouver-based forest products producer says its net income equalled five cents per share in the second quarter, compared with a net loss of 17 cents per share or $11.2 million a year earlier.

Adjusted profits came in at $10.6 million or 16 cents per share, versus a loss of $16.2 million or 24 cents per share in the second quarter of 2019.

Revenues for the three months ended June 30 decreased 17.5 per cent to $396.8 million from $481.3 million a year earlier.

Interfor was expected to report four cents per share in adjusted profits on $351 million of revenues, according to financial markets data firm Refinitiv.

Total lumber production decreased by nearly one-third to 421 million board feet from the first quarter as it temporarily cut output in an early response to the COVID-19 pandemic before returning to normal rates by the end of the quarter.

Production in the B.C. region declined 38 per cent to 115 million board feet from 186 million board feet in the preceding quarter. Output in the U.S. South and U.S. Northwest regions fell 26 and 41.5 per cent respectively.



Western Forest Products earns $8.5M in second quarter

WFP beats expectations

Western Forest Products Inc. beat expectations as the company earned $8.5 million in its latest quarter on a 17-per-cent drop in revenues over uncertainty related to COVID-19.

The Vancouver-based company says it earned two cents per share in the second quarter, compared with zero cents per share or a loss of $700,000 a year earlier.

Revenues for the three months ended June 30 were $256.3 million, down from $310.3 million in the prior year.

Western Forest Products was expected to report no profits on $153.5 million of revenues, according to financial markets data firm Refinitiv.

Lumber and log sales fell 19 per cent to $188.8 million on market uncertainty and delayed shipments due to COVID-19 with volumes decreasing 28 per cent to 152 million board feet. Prices increased 12 per cent as a result of higher specialty product mix and a weaker Canadian dollar.

Western Forest Products says $10.7 million of Canada Emergency Wage Subsidy funding prevented curtailments and layoffs in the quarter.

"We successfully re-established our business after the lengthy strike and despite considerable uncertainty caused by COVID-19," said CEO Don Demens, referring to a strike by the United Steelworkers union that ended in the first quarter with restarting of its Cowichan Bay sawmill.



Magna takes big hit from COVID-19 auto production shutdowns

Magna takes big hit

Magna International Inc. says COVID-19 shutdowns of automotive production caused a US$1.2 billion drop in its earnings and $5.5 billion hit to sales in the second quarter.

The autoparts maker says the impact was far worse than the quarterly declines during the 2008-2009 financial crisis as it lost US$647 million or $2.17 per diluted share in the second quarter, compared with a profit of US$452 million or $1.42 per share a year earlier.

Reporting in U.S. dollars, its adjusted loss was $1.71 per share, down from a $1.59 per share profit in the prior year.

Revenues for the three months ended June 30 plunged nearly 58 per cent to $4.3 billion, compared with $10.1 billion in the second quarter of 2019.

Magna was expected to report an adjusted loss of $1.57 per share on $4.1 billion of revenues, according to financial markets data firm Refinitiv.

The Ontario-based company says global light vehicle production was down 42 per cent while production in its two largest markets in North American and Europe were down 70 and 59 per cent respectively.

“While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world," said CEO Don Walker.

"Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production. We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”



Indigo reports $31M loss thanks to COVID-19 store closures

Indigo reports $31M loss

Indigo Books & Music Inc. reported a larger net loss and a nearly 30 per cent drop in revenue in its most recent quarter.

The book retailer recorded a net loss of about $31.6 million for the 13 weeks ended June 27 compared to a net loss of about $19.1 million in the same quarter the previous year.

That amounts to a loss of $1.15 per common share for the first quarter compared to a loss of 69 cents per share in 2019.

The Toronto-based company's revenue fell to $135.1 million from $192.6 million as its stores were closed for the majority of the first quarter due to COVID-19.

With stores closed, the retailer's online revenue jumped 214 per cent compared to the same time the previous year.

The company says it reduced discretionary spending and its workforce during the quarter, and closed on a $25-million, interest-free revolving credit facility this month from a company controlled by Gerald Schwartz, a controlling shareholder of Indigo.



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