Wamock-Hersey International

"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"

"which they so excelled. They traded their assets to acquire control of Power. The deal worked this way: 1. Power created a special 5 percent second preferred share issue of 10,000,000 shares at $12 per share ($120 million total). 2. The number of 6 percent participating preferred shares — the ones that carried 10 votes each, and dictated control of the company — was increased. 3. Enough of the 5 percent second preferred shares were offered to Trans-Canada Corporation Fund shareholders on a one-for-one trade for Power to acquire all tccf shares. 4. Gelco received 57 percent of the Power second preferred shares offered for purchase of tccf; the remaining 43 percent of tccf shares were redeemed from their holders, making tccf a 100- percent owned and controlled Power subsidiary. 5. Then Peter Thomson traded a bit more than half of his 6-percent participating preferred shares of Power — the ones that carried 10 votes each — to Gelco on a two-for-three swap for the new 5- percent second preferred shares (with no votes). 6. The trade gave Desmarais voting rights through Gelco on Power’s board slightly greater than those of Thomson, who held his Power shares through a recently created holding company, Wamock- Hersey International, which held a number of Thomson’s non- Power investments. 7. Between them, Desmarais and Thomson controlled about 61 per¬ cent of Power’s votes and, consequently, Power’s board. 8. Desmarais became chairman and chief executive officer and Peter Thomson deputy chairman. 9. Desmarais and Thomson entered into a voting trust, whereby Thomson’s voting shares were voted by Desmarais."

"Under the direction of Desmarais and Thomson, Power and Wamock- Hersey International (whi) traded holdings. Power got whi’s shares in companies in which it wanted to increase its holdings in return for those Power holdings that whi wanted, including the leisure industries."