pension plan

BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 804.7 million; Market cap; $31.4 billion; SI Rating: Above average) has moved down since it accepted a $42.75-a-share takeover offer from a private group led by the Ontario Teachers’ Pension Plan. That’s partly due to concerns that the group may have trouble borrowing the cash it needs for the purchase. However, the group has already secured financing deals with several banks. BCE has also suspended its stock buyback program, which has put pressure on the stock. Assuming shareholders accept the offer at a special meeting on September 21, 2007, and communication regulators also approve, the group aims to complete the transaction in early 2008. Meanwhile, BCE will continue to pay quarterly dividends of $0.365 a share (3.7% yield)....

BCE INC. $41.32 (Toronto symbol BCE; SI Rating: Above-Average) has accepted a $42.75- a-share all-cash takeover offer from a group led by the Ontario Teachers’Pension Plan. The group will also redeem all of BCE’s outstanding preferred shares and debentures. Two-thirds of BCE investors must approve the transaction at a special meeting later this year. Counter offers are still possible. For example, TELUS CORP. $64.64 (Toronto symbol T.A; SI Rating: Above average) could renew its merger proposal. Telus could afford to pay more for BCE than other potential bidders, since a merger between the two would produce significant savings....

BCE INC. $37.59 (Toronto symbol BCE; SI Rating: Above-Average) is now in discussions with a consortium of three big Canadian pension plans and U.S.-based private equity firm Kohlberg Kravis Roberts about a takeover. This has raised the possibility of a bidding war for the company, since the Ontario Teachers’ Pension Plan is putting together its own group with some other pension funds. Other groups could also enter the bidding. The takeover bids have arisen partly from recent regulatory changes that make it easier for established phone providers like BCE to compete with cable companies. The changes greatly enhance BCE’s long-term prospects, and should help it extract a high bid. It could take several weeks before the first formal offer emerges. The price on the successful bid will depend on market conditions and other factors, but could reach the mid-$40s....

BCE INC. $35 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 807.6 million; Market cap: $28.3 billion; SI Rating: Above average) has moved up to its highest level in five years on takeover rumors. Media reports suggest that the Ontario Teachers’ Pension Plan, which owns 5.3% of BCE, may team up with a U.S. firm to offer $40 a share. Acquiring control of BCE could be difficult. Institutions control roughly 22% of BCE’s stock, and could block an offer they feel is too low. Federal regulations limit foreign ownership of Canadian telecom companies to 46%, which makes it harder to recruit non-Canadian investors. Other potential Canadian bidders like Telus would probably face competition concerns, particularly in the highgrowth wireless field....

SHERMAG INC. $1.91 (Toronto symbol SMG; SI Rating: Speculative) (819-566-1515; www.shermag.com; Shares outstanding: 13.3 million; Market cap: $25.5 million) makes high-quality residential furniture at plants in Quebec and New Brunswick. It has suffered in the past few years from the strength of the Canadian dollar, which cuts the price of imported furniture and raises Shermag’s export prices. Shermag’s sales fell 17.4% in the three months ended December 29, 2006, to $38.4 million from $46.5 million. The company lost $7.7 million or $0.58 a share, compared to a loss of $4.3 million or $0.32 a share a year earlier. In addition to the impact of the higher Canadian dollar, Shermag had to absorb startup costs at a new distribution centre in Montreal. The latest quarter also included a $3.5 million charge to shut down two plants in Quebec, as part of its shift of production to Asian suppliers. Competition from China remains a threat, but Shermag is on track to ultimately shift 50% of its manufacturing to Asia. The U.S. dollar has risen against the Canadian dollar since the last quarter ended but it still remains a concern, since Shermag makes around 70% of its sales in the U.S. However, Shermag still holds a well-established reputation for highquality furniture and designs....

You can now take out $2,000 a year from a RRIF without paying federal income taxes i f you’re over 65, up from $1,000 previously. This will let you save around $305 a year in tax, up from $153. To take full advantage of the credit, you can transfer approximately $9,100 to a RRIF at age 65 (which assumes a growth rate of 5% a year), and then take $2,000 out per year from ages 65 through 69....

You can now take out $2,000 a year from a RRIF without paying federal income taxes if you’re over 65, up from $1,000 previously. This will let you save around $305 a year in tax, up from $153. To take full advantage of the credit, you can transfer approximately $9,100 to a RRIF at age 65 (which assumes a growth rate of 5% a year), and then take $2,000 out per year from ages 65 through 69....

High quality Real Estate Investment Trusts, or REITs, are among the most stable of the royalty and investment trusts. That’s because they own nondepleting assets, and can lock in lease rates and financing costs for long terms. Investors are also aware of the takeover prospects for REITs these days. That’s not reason enough alone to buy them, but it’s a plus. The REITs we recommend hold top-quality assets. In contrast, many other types of trusts hold lowquality assets in volatile industries such as resources and commodities, sugar production or restaurants. These trusts expose holders to hidden business risks that could have a sudden, devastating effect on their cash flow and yields....

GREAT-WEST LIFECO INC. $30 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) has paid an undisclosed sum for roughly 2,600 small and mid-sized U.S. pension plans. The deal expands the company’s U.S. pension plan asset base by 9%, and should increase its earnings in 2007. The purchase should also make it easier for Great-West to offer these new clients other services, such as employee healthcare plans. The company gets over half of its income from businesses outside of Canada, and the high Canadian dollar has hurt Great-West’s overall profit growth. But the rising dollar also cuts the cost of foreign acquisitions. The stock now trades at 14.0 times the $2.15 a share Great-West will probably earn in 2006. Great-West Lifeco is a buy.

MANITOBA TELECOM SERVICES INC. $46 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; SI Rating: Average) provides local, long distance and wireless communication services to 1.8 million customers in Manitoba. In 2004, the company acquired Allstream Inc., a national provider of telecom services to businesses, as part of a plan to cut its reliance on Manitoba. Allstream now accounts for around 55% of Manitoba Tel’s revenue, and 30% of its profit. However, the business telecom market is highly competitive, and falling rates have hurt Allstream’s revenue and profits....