Consolidated-Bathurst

"later. In June, 1972, Canada Steamship Lines, Power’s only directly wholly owned subsidiary, bought almost all of Power’s investment portfolio for $145 million. The sale didn’t seem to make sense. For $145 million, csl bought Power’s investments in Dominion Glass Co. Ltd., The Investors Group, Consolidated-Bathurst and the Gesca $19.6-million income debenture. The deal included Trans-Canada Corp. Fund and through it one of its holdings, Shawinigan Industries Ltd., the interests in Laurentide, Argus, Imperial Life and other Power investments. Desmarais had essentially sold Power to itself, accomplishing an internal reverse takeover. Technically, the manoeuvre was a realign¬ ment of assets, because Power didn’t make any profit on the deal. The $145-million purchase price was book value (the value carried on the books computed as total assets less outstanding debt), paid $70.5 million in cash and $74.6 million in promissory notes with 9.5 percent interest, plus a series of debentures staggered to come due at intervals between 1972 and 1992. The sale solved one problem each for Power and csl. One effect was that by transferring some of its debt to csl, Power gave csl a way to reduce its income taxes."

"whi also purchased Power’s shares in Capital Management Ltd., Roy west Banking and Yorkshire Financial Corp. Ltd. whi was at the time as cash-light as Power, and paid for the Power assets it acquired with blocks of shares that it held in Canadian Interurban Properties, Consolidated-Bathurst, Laurentide Financial, Dominion Glass3, and Northern and Central Gas Corp. Ltd., plus a promissory note for $5 million."

"During the Power turnaround years, he had continued his habit of travelling extensively overseas. He was able to do so because Parisien was the man on site who oversaw the technicalities of implementating Desmarais’s plans. So Desmarais explored. He discovered opportun¬ ities in the Middle East, in transportation, energy and the provision of financial contacts and services to oil-rich countries. So excited was he about these opportunities that, in 1972, Desmarais directed the pilot of Power’s corporate jet to have extra fuel tanks installed so they could fly non-stop from Montreal to Beirut, Lebanon. Overall, the formula that had worked for Consolidated-Bathurst would work for Power: retrench and consolidate the core of the com¬ pany; ensure it was stable and reasonably secure; then expand to the big markets, Europe and the United States. But the terrain had to be reconnoitered, contacts made and developed — overseas expansion of Power’s business opportunities would take time to develop. But"

"At the same time, Desmarais made abortive bids for Tele-Metropole ($97 million), which operates a French tv station in Montreal, and Teleglobe Canada ($300 million), the Crown corporation that provides overseas long-distance phone services to Canadians. He also wanted to buy Domtar and Donohue, two huge forest and packaging products companies, for merger with Consolidated-Bathurst. The two had been acquired by the Caisse de Depot et Placement du Quebec under the Parti Quebecois regime in Quebec in the early 1980s. The unsuccessful bids for Tele-Metropole and Teleglobe put a crimp in Desmarais’s plans for the Power Corp. that he hoped to hand over to his sons. Desmarais wanted Tele-Metropole for two reasons, one being that it would make the perfect core corporation for another Power subsidiary he wished to set up and call Power Communications. All of Power’s communications holdings — the daily and weekly newspapers, publishing interests, radio and tv — most of them held through Gesca Ltee., would be grouped in the new company, which would be created much the same way Power Financial had been. His younger son, Andre, a Power vice-president in charge of communi¬ cations holdings, would eventually assume presidency of the new company, as his brother, Paul Jr., had at Power Financial."

"So, most of Power’s growth during the 1970s had occurred through quiet purchases by its subsidiaries of other, complementary companies that increased their value on the market and to Power, rather than through spectacular coups. Consolidated-Bathurst acquired its sub¬ sidiaries in glass container and packaging products this way; Montreal Trust expanded by buying other trust companies; Investors grew by acquiring other mutual and investment funds, though it also set up more of its own funds; and Canada Steamship Lines grew by pur¬ chasing trucking and courier operations."