The economics of private placements : middle-market corporate finance, life insurance companies, and a credit crunch

In this article, Stephen Prowse examines the private placement market. Like the bank loan market, this market is information-intensive: parties negotiate lending terms, lenders evaluate and monitor borrowers' credit risk, covenants are used to control risk, and borrowers lack access to public debt markets. There are also differences from the bank loan market : debt instruments are securities, not loans; maturities are longer; interest rates are fixed, not floating; and the principal investors are life insurance companies not banks. The article provides evidence on the credit crunch that occurred in the below-investment-grade sector of this market in the early 1990s and that apparently continues to this day. Asset-quality problems in 1990 and 1991 focused regulatory, stock market, media, and policyholder attention on the financial solvency of insurers, who withdrew from this sector of the market. The article also examines reasons for the persistence of the crunch.Bank loans ; Interest rates ; Credit

The economics of the private equity market

The private equity market is an important source of funds for start-ups, private middle-market companies, firms in financial distress, and public firms seeking buyout financing. Over the past fifteen years, it has been the fastest growing corporate finance market, far surpassing the public equity and public and private bond markets. In this article, Stephen Prowse examines the economic foundations of the private equity market and describes its institutional structure. He also explores reasons for the market's explosive growth and highlights the main characteristics of that growth, including data on returns to private equity investors. He describes the important investors, intermediaries, and issuers in the market and their interactions with each other. In particular, he investigates how the major intermediary in the market--the limited partnership--addresses the severe information problems associated with investing in small private firms.Capital market ; Financial markets ; Venture capital

Alternative methods of corporate control in commercial banks

In this article, Stephen Prowse investigates how owners of commercial banks encourage management to follow value-maximizing policies. While the "corporate control mechanism" in nonfinancial firms is well documented, for the banking industry much less evidence is available. Moreover, unique factors in the operating environment of commercial banks may mean that their corporate control mechanism operates differently from that of nonfinancial firms. ; Prowse analyzes a sample of bank holding companies (BHCs) from 1987 to 1992 to determine how many underwent a change in corporate control by hostile takeover, friendly merger, action by the board of directors, or intervention by regulators. Prowse finds that the primary market-based corporate control mechanism among BHCs is action by the board, although bank boards appear to be much less assertive than boards of nonfinancial firms. Overall, the market-based corporate control mechanisms in banks do not appear as efficient at disciplining managers as they are in other firms. By default, this has given a primary role to regulators to provide a "last resort" control mechanism. Prowse analyzes reasons for this and evaluates how proposed banking legislation might affect corporate governance.Banks and banking ; Corporations

Corporate finance in international perspective: legal and regulatory influences on financial system development

In the postwar period, systems of corporate finance and governance have emerged in the United States, Japan, and Germany that are dramatically different from one another. To date, there has been little focus on why. Stephen Prowse argues that differences in three aspects of the legal and regulatory environments in these countries are responsible. First, the severity of legal and regulatory restraints on financial institutions being "active" investors in firms. Second, the degree to which corporate securities markets are suppressed by regulation. Finally, the degree to which securities markets are "passively" suppressed by the absence of mandated disclosure requirements. ; Prowse compares the merits of each system and argues that the U.S. system may be more favorable to the growth of high-technology firms. He discusses the future evolution of each system. The German and Japanese regulatory environments are changing rapidly to increase the role of securities markets in corporate finance. The U.S. environment is also changing to give financial institutions more latitude to be active investors in firms. Over the long term, the regulatory environments of all three countries appear to be converging. The focal point of this convergence is an entirely new environment in which financial institutions are free to be active investors and corporate securities markets are unhindered by regulatory obstacles.Corporations - Finance ; International finance

Mapping New Zealand and Antarctic snowpack from LANDSAT

Ther are no author-identified significant results in this report

Regional Assessment of GCM-Simulated Current Climate over Northern Canada

Several international Global Climate Models (GCMs) are evaluated on their ability to simulate the mean values and spatial variability of current (1961–90) temperature and precipitation over four regions across Canada’s North. A number of observed climate data sets for Arctic Canada are also assessed. Results reveal a close correspondence, particularly for temperature, among the four observed climate data sets assessed. However, the various GCM simulations of this observed climate show considerable inter-regional and seasonal variability, with temperature more accurately simulated than precipitation. Temperature findings indicate that the British HadCM3, German ECHAM4, and Japanese CCSR-98 models best replicate annual and seasonal values over all sub-regions. The Canadian CGCM2 and U.S. NCAR-PCM models have intermediate accuracy, and the Australian CSIRO-Mk2b and U.S. GFDL-R30 models are least representative. Temperature simulations from the various GCMs collectively display a similar degree of accuracy over all sub-regions, with no clear evidence of superiority in any given area. Precipitation, conversely, is accurately simulated by the majority of models only over northern Quebec/Labrador. All GCMs substantially overestimate annual and seasonal precipitation amounts in the western and central Canadian Arctic.Plusieurs modèles de climats du globe (MCG) internationaux ont été évalués quant à leur aptitude à simuler les valeurs moyennes et la variabilité spatiale de températures et de précipitations récentes (1961-1990) dans quatre régions du Nord canadien. Certains ensembles de données sur le climat observé dans l’Arctique canadien sont également évalués. Les résultats révèlent une correspondance étroite, surtout pour ce qui est de la température, entre les quatre ensembles de données de climats observés qui font l’objet d’une évaluation. Cependant, les diverses simulations de MCG quant au climat observé affichent une grande variabilité entre les régions et les saisons, les températures faisant l’objet de simulations plus précises que les précipitations. Les constatations en matière de précipitations laissent supposer que les modèles HadCM3 britannique, ECHAM4 allemand et CCSR-98 japonais répliquent mieux les valeurs annuelles et saisonnières dans toutes les sous-régions. Pour leur part, les modèles CGCM2 canadien et NCAR-PCM américain présentent une exactitude intermédiaire, tandis que les modèles CSIRO-Mk2b australien et GFDL-R30 américain sont les modèles les moins représentatifs. Ensemble, les simulations de températures des divers modèles MCG affichent un degré semblable d’exactitude dans toutes les sous-régions, sans qu’il n’y ait de modèle nettement supérieur dans une région donnée. Réciproquement, les précipitations sont simulées avec exactitude par la majorité des modèles dans le nord du Québec et le Labrador seulement. Tous les MCG surestiment, de manière substantielle, les quantités de précipitations annuelles et saisonnières dans l’ouest et dans le centre de l’Arctique canadien

Shifts in Plankton, Nutrient and Light Relationships in Small Tundra Lakes Caused by Localized Permafrost Thaw

Tundra lakes located in the Mackenzie Delta uplands, NWT, Canada, are increasingly being affected by permafrost thaw in the form of shoreline retrogressive thaw slumping. This form of thaw-induced disturbance is used as a surrogate indicator of landscape-related disturbance linked to regional climate warming. We compared 22 lakes, half affected by thaw slumping and half unaffected, to determine whether water column nutrient concentrations, light availability, and plankton biomass differed between these two lake types. Total phosphorus (TP), total dissolved nitrogen (TDN), dissolved organic carbon (DOC), and chlorophyll a concentrations were higher in unaffected lakes than in slump-affected lakes. Absorbance related to water colour of both UV and photosynthetically active radiation in the water column was also higher in unaffected lakes, but bacterioplankton abundance was not different between lake types. UV light absorbance was found to be the best predictor of pelagic chlorophyll a concentrations in unaffected lakes, whereas TDN (and to a lesser extent TP) were the best predictors of pelagic chlorophyll a in slump-affected lakes. These findings indicate that slumping arising from permafrost thaw produces a shift in tundra lake nutrient, light, and phytoplankton relationships. Given the projections of continued warming, this result has significant implications for the future biogeochemical and ecological states of Arctic tundra lakes.Les lacs de toundra situés dans les hautes terres du delta du Mackenzie, dans les Territoires du Nord-Ouest, au Canada, sont de plus en plus touchés par le dégel du pergélisol en ce sens qu’il y a glissement régressif du littoral dû au dégel. Cette forme de perturbation attribuable au dégel sert d’indicateur auxiliaire en matière de perturbation du paysage liée au réchauffement climatique de la région. Nous avons comparé 22 lacs, dont la moitié était touchée par le glissement dû au dégel et l’autre moitié ne l’était pas, afin de déterminer si les concentrations en nutriments des colonnes d’eau, la disponibilité lumineuse et la biomasse du plancton différaient entre ces deux types de lacs. Les concentrations de phosphore total (PT), d’azote dissous total (ADT), de carbone organique dissous (COD) et de chlorophylle a étaient plus élevées dans les lacs non touchés quand dans les lacs où il y avait glissement du littoral. L’absorbance liée à la couleur de l’eau du rayonnement actif photosynthétique et du rayonnement actif ultraviolet dans les colonnes d’eau était également plus élevée dans les lacs non touchés, mais l’abondance du bactérioplancton ne différait pas d’un type de lac à l’autre. On a déterminé que l’absorbance de lumière ultraviolette était le meilleur prédicteur de concentrations de chlorophylle a pélagique dans les lacs non touchés, tandis que l’ADT (et le PT, dans une moindre mesure) constituaient les meilleurs prédicteurs de chlorophylle a pélagique pour ce qui est des lacs faisant l’objet d’un glissement. Ces constatations indiquent que le glissement attribuable au dégel du pergélisol altère les relations qui existent entre les nutriments, la lumière et le phytoplancton des lacs de toundra. Compte tenu des projections à l’égard d’un réchauffement continuel, ce résultat revêt d’importantes incidences sur les états biogéochimiques et écologiques des lacs de la toundra arctique

Hedgehog Signalling in Androgen Independent Prostate Cancer

Objectives: Androgen-deprivation therapy effectively shrinks hormone-naïve prostate cancer, both in the prostate and at sites of distant metastasis. However prolonged androgen deprivation generally results in relapse and androgen-independent tumour growth, which is inevitably fatal. The molecular events that enable prostate cancer cells to proliferate in reduced androgen conditions are poorly understood. Here we investigate the role of Hedgehog signalling in androgen-independent prostate cancer (AIPC). Methods: Activity of the Hedgehog signalling pathway was analysed in cultured prostate cancer cells, and circulating prostate tumour cells were isolated from blood samples of patients with AIPC. Results: AIPC cells were derived through prolonged culture in reduced androgen conditions, modelling hormone therapy in patients, and expressed increased levels of Hedgehog signalling proteins. Exposure of cultured AIPC cells to cyclopamine, which inhibits Hedgehog signalling, resulted in inhibition of cancer cell growth. The expression of the Hedgehog receptor PTCH and the highly prostate cancer-specific gene DD3PCA3 was significantly higher in circulating prostate cancer cells isolated from patients with AIPC compared with samples prepared from normal individuals. There was an association between PTCH and DD3PCA3 expression and the length of androgen-ablation therapy. Conclusions: Our data are consistent with reports implicating overactivity of Hedgehog signalling in prostate cancer and suggest that Hedgehog signalling contributes to the androgen-independent growth of prostate cancer cells. As systemic anti-Hedgehog medicines are developed, the Hedgehog pathway will become a potential new therapeutic target in advanced prostate cancer.Peer reviewedFinal Accepted Versio

Dynamic simulation of the THAI heavy oil recovery process

Toe-to-Heel Air Injection (THAI) is a variant of conventional In-Situ Combustion (ISC) that uses a horizontal production well to recover mobilised partially upgraded heavy oil. It has a number of advantages over other heavy oil recovery techniques such as high recovery potential. However, existing models are unable to predict the effect of the most important operational parameters, such as fuel availability and produced oxygen concentration, which will give rise to unsafe designs. Therefore, we have developed a new model that accurately predicts dynamic conditions in the reservoir and also is easily scalable to investigate different field scenarios. The model used a three component direct conversion cracking kinetics scheme, which does not depend on the stoichiometry of the products and, thus, reduces the extent of uncertainty in the simulation results as the number of unknowns is reduced. The oil production rate and cumulative oil produced were well predicted, with the latter deviating from the experimental value by only 4%. The improved ability of the model to emulate real process dynamics meant it also accurately predicted when the oxygen was first produced, thereby enabling a more accurate assessment to be made of when it would be safe to shut-in the process, prior to oxygen breakthrough occurring. The increasing trend in produced oxygen concentration following a step change in the injected oxygen rate by 33 % was closely replicated by the model. The new simulations have now elucidated the mechanism of oxygen production during the later stages of the experiment. The model has allowed limits to be placed on the air injection rates that ensure stability of operation. Unlike previous models, the new simulations have provided better quantitative prediction of fuel laydown, which is a key phenomenon that determines whether, or not, successful operation of the THAI process can be achieved. The new model has also shown that, for completely stable operation, the combustion zone must be restricted to the upper portion of the sand pack, which can be achieved by using higher producer back pressure