Your Rights

This is good news! I think people are starting to wake up and see what’s really going on here. You can view the article online by clicking HERE.

By Bruce Cheadle, The Canadian Press

OTTAWA - The federal government has served notice it has deep reservations about the sale of Canada’s biggest space technology firm to an American arms-maker.

Industry Minister Jim Prentice confirmed Thursday he wrote to Alliant Techsystems Inc. on April 8 to advise the U.S. company that he’s not assured that the proposed sale of MacDonald, Dettwiler and Associates Ltd. (TSX:MDA) “is likely to be of net benefit to Canada.”

The unprecedented notice does not kill the proposed $1.325-billion sale that would see Canada’s taxpayer-subsidized Radarsat 2 satellite, Canadarm and Dextre robotics fall under the ownership of a major U.S. defence contractor.

But amid an avalanche of criticism that the sale would jeopardize Canada’s Arctic sovereignty, shift critical security technology to U.S. legal control and gut the domestic space industry, Ottawa is signalling the transaction is not a done deal.

“On the basis of the information contained in your application and other information I have about your investment, I am not satisfied that your investment is likely to be of net benefit to Canada,” said the Prentice letter, released Thursday by Minneapolis-based ATK.

It is the first time a proposed takeover has ever been rejected outright among some 1,500 reviews under the Investment Canada Act since 1989, a point stressed by Prime Minister Stephen Harper on Thursday in the Commons.

“No one should doubt the determination of this government and this minister to protect this country’s interests,” said Harper.

Prentice’s the three-paragraph letter does not state the exact nature of his concerns.

Alliant Techsystems, which gets the majority of its revenues from U.S. military and intelligence contracts, has 30 days “to make representations and submit undertakings” in an attempt to reverse the rejection.

An ATK spokesman said by e-mail that “the bottom line is the process continues.” Company officials are expected to be in Ottawa next week to discuss the matter.

Vancouver-based MDA also issued a terse statement: “As far as MDA is aware … discussions between the parties continue.”

News of the letter caused market analysts to immediately reassess the value of MDA shares. GMP Securities issued a “hold” advisory on MDA stock Thursday, “reflecting a 33-per-cent probability of deal going through,” according to GMP’s analysis.

The most valued asset in the sale is Radarsat 2, which represents at least a $445-million taxpayer investment and decades of intellectual property development. One former Radarsat project manager estimates the real cost of the endeavour to the Canadian government at more than $800 million.

But it is control of Radarsat’s imaging data that has security and sovereignty experts up in arms.

Although the Canadian government has firm contractual rights on the data for the seven-year life of the satellite - which was just launched in December - strict U.S. security laws could trump Canadian control of the satellite.

Moreover, ATK has acknowledged that its corporate goal is to build subsequent generations of satellites using the intellectual property from the MDA purchase, and those satellites would be firmly under U.S. legal control.

Marc Garneau, the first Canadian in space and former head of the Canadian Space Agency, told CTV’s “Canada AM” from Montreal on Thursday that the government is making the right decision.

He said MDA is different from other companies, noting taxpayers have over the last three decades helped build the Vancouver company to its current level. He said if the company’s technology, expertise and intellectual property were sold to the United States, Canadians would be “back at square one” in trying to rebuild a capability that took decades to achieve.

Liberals, New Democrats and the Canadian Auto Workers all applauded the government decision while demanding that new resources and direction be given to the Canadian Space Agency.

“Canadians have too much invested in this industry to let it slip into another nation’s hands,” CAW president Buzz Hargrove said in a release.

But former U.S. defence secretary William Cohen, speaking at an arms expo in Ottawa, said the Canadian decision was more emotional than rational.

“I don’t think the fear is justified,” he said.

“The one thing we share is a common security threat and what we need to do is work ever more closely together.”

Steven Staples of the Rideau Institute, an independent foreign policy think-tank, argued there are many rational reasons for rejecting the technology transfer, but noted that politics played into the decision as well.

“I think the most compelling factor was that the Harper government has sort of reawakened Canadians’ imagination about the North,” Staples told a news conference.

“So a loss of this capability would have been a blow against the government’s stated intentions of promoting Canadian sovereignty in the North. It would have been just too contradictory.”

MDA has dominated Canada’s space technology field in recent years, winning more than 50 per cent of all contracts awarded by the Canadian Space Agency.

Prentice had already taken a 30-day extension to examine the sale under the Investment Canada Act. His April 19 deadline has now been pushed back to May 8 - 30 days from the time ATK received his notice after markets closed Tuesday afternoon.

ATK, with 17,000 employees and over $4.1 billion in annual revenue, has its core business in conventional munitions and rocket motors, with a strategy to grow as a provider of advanced weaponry and space systems.