Gesca Ltee.

"So, while restructuring was simplifying Desmarais’s task of bol¬ stering income, it still didn’t deal with Power’s debt. Personally, he still didn’t have complete control of Power. Desmarais’s final moves in 1970 — all of which were intertwined in a complex shifting of assets, cash and debt — solved Power’s debt problems, Gelco’s debt problems, Desmarais’s desire for control, and improved Power’s in¬ come picture. Step One: In early December, Power sold its oil and gas holdings for $13.25 million and paid off Power’s $12 million debt, about which Power’s backers, the Royal Bank, were becoming edgy. The edginess resulted because not only did Power carry a large debt; so did Gelco, the Desmarais-Parisien holding company through which they held their Power shares. Step Two: A week later, through Gelco, Desmarais bought the rest of the Power 10-vote 6-percent participating preferred shares that Thomson held through Wamock-Hersey International, for $7.2 million. At this point, Thomson was left with just under 2 percent of the voting power in the company that his father had helped found, and Desmarais had well over 50 percent of Power votes, with just under 19 percent of the company equity. Step Three: Since Desmarais now owned majority control of Power, it could no longer be viewed as an “English establishment” corporation. So, he sold to Power for $19 million the Gesca Ltee. income debenture that Power had sold to Gelco in 1969 to defuse public and government criticism that an “English establishment” company controlled the"

"Once the Power-TCCF merger occurred, though, Desmarais only had his 31-percent voting stake in Power. Though he had effective control of Power, he didn’t have absolute control, and if La Presse were brought into the Power portfolio, Desmarais could technically be in violation of the act. So, before the deal was consummated, Compagnie de Publication de La Presse was pulled out of the tccf portfolio and placed under control of Gesca Ltee., a direct subsidiary of Gelco. Gesca held the voting stock of Compagnie de Publication de La Presse Ltee., and Desmarais met the conditions of ownership of La Presse. However, to maximize the potential return on the Power deal, a $19,750,000 income debenture secured by the assets of La Presse was issued to Power. Consequently, 100 percent of the equity of La Presse was controlled by Power, as were all of La Presse's earnings, but voting and management control stayed in Desmarais’s hands, according to the law.2"

"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."