Debt as Temporary Tool, Never Permanent Foundation

“his bankers into terminal shock. Desmarais has used debt as one instrument to finance his ambitions, yet has always been uncomfort¬ able carrying large debt — it leaves a company vulnerable to its creditors and erodes the controlling position of its managers, because creditors, especially bankers, feel they can dictate the conduct of”

“One, he had learned from the Sudbury Bus Lines experience that heavy debt-financing is a precarious foundation for a company’s fi¬ nances; it erodes the value of future earnings, which have to be plowed into debt servicing, rather than dividends to shareholders. Two, in his early deals he was chronically short of cash. Because his cash flow was generally plowed back into operations, rather than to acquisitions, he always had to find alternative and creative ways to finance his deals. Three, he was and is smart enough to find creative ways to finance his ambitions.”