La Presse

"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"

"Though Power incurred a new $ 19-million debt to buy the deben¬ ture, the debt was secured by income from the debenture and wasn’t serviced from Power’s dividend income from other sources. All in¬ come from La Presse and earnings from Gesca’s interest in Les Jour- naux Trans-Canada Ltee. were paid to Power, the debenture holder. The income debenture paid no interest, but its earnings were greater than the interest costs on Power’s new $ 19-million debt. Though Power now carried a larger debt than it had retired two weeks earlier, it caused Power’s bankers little agitation because it was secured by income from the debenture, not from Power’s cash flow. Ironically, the shuffle of debt and assets and assumption of greater debt by Power improved its cash-flow picture without increasing dividend-based cash flow by one cent; it simply reduced the demands made on Power’s dividend income."

"company that owned La Presse, Quebec’s most influential French newspaper. Step Four: Gelco paid Peter Thomson the $7.2 million for his Power shares from the $19 million it received from Power. Step Five: The remaining $12 million was applied against Gelco debt."