BUSINESS

Fighting new battles

Peter Pocklington is under fire again

JOHN DeMONT August 14 1989
BUSINESS

Fighting new battles

Peter Pocklington is under fire again

JOHN DeMONT August 14 1989

Fighting new battles

Peter Pocklington is under fire again

Edmonton entrepreneur Peter Pockling ton describes himself

as one of the true champions of free enterprise. In fact, during his unsuccessful 1983 campaign for the federal Progressive Conservative party leadership, he promised to dismantle what he called “the socialist wasteland” that he said the Liberal government of Pierre Trudeau had created. Now, Pocklington’s own willingness to accept government handouts has attracted attention. The uproar concerns $67 million in Alberta government loans and guarantees to Gainers Properties

Inc., Pocklington’s meat-packing company. At the time Gainers obtained the loans, it had planned to upgrade its Edmonton plant and build a new hog-slaughtering and processing

facility near Calgary. Since then, Gainers has

admitted that it is in financial trouble and that it has shelved its expansion plans. Gainers’ outlook grew darker last week when Alberta Agriculture Minister Ernest Isley acknowledged that Gainers’ Edmonton plant was so

obsolete that it will eventually have to be closed. Even more startling was the report that Gainers, flush with Alberta government aid, was considering expanding its meat-packing operations into Quebec.

operations Quebec.

Last week’s developments set alarms ringing across Alberta, where the provincial government is already under fire for its role in the

Principal Group Ltd. collapse. The political opposition has accused Premier Donald Getty’s government of putting millions in taxpayers’ money at risk by providing financial backing for Pocklington at a time when the meat-packing business is in trouble—and when the Edmonton businessman may already be looking to close his Alberta facilities. Said Alberta New Democrat leader Raymond Martin: “Here’s a guy who talks free enterprise yet has more ways of getting money out of the government than anyone I know.” At the same time, Pocklington has weathered bad publicity arising

from the violent six-month 1986 strike at his Gainers plant and from his sale of Edmonton Oiler hockey star Wayne Gretzky to the Los Angeles Kings last August for $18 million.

But the flamboyant, 47-year-old business-

man has never appeared overly concerned with his public image. Pocklington was born in Regina and raised in London, Ont. The son of an insurance salesman, he dropped out of high school at age 17 and began importing and selling antique cars that same year.

Pocklington moved to Edmonton in 1971 and, within a decade, he had built up an empire that included real estate, a trust company, two meat-packing companies and an oil and gas company. In addition to the Edmonton Oilers of the National Hockey League, Pocklington also owned minor-league soccer and baseball teams. Because all of his companies are pri-

vate, no reliable estimates of the value of Pocklington’s empire have ever been published. But Pocklington was battered badly during the 1982-1983 recession. His Albertabased Patrician Land Corp. and Fidelity Trust Co. Ltd. both collapsed, and his Elgin Ford car dealership in Toronto went bankrupt.

Since then, he has been battling back— sometimes with the help of government money. In September, 1988, he received a $480,000 grant and a $5.9-million loan from the Saskatchewan government for a $36-million abattoir in North Battleford. Only the $7million bacon facility has been completed.

The first public indication that something was awry came when Gainers missed the May, 1989, deadline to start construction of the new abattoir. On June 30, Pocklington met privately with Alberta Treasurer Archibald (Dick) Johnston, Premier Donald Getty and now Minister of Economic Development and Trade Peter Elzinga to discuss Gainers’ precarious finances. A week later, the company announced that an extensive environmental-impact study had to be completed before construction of the abattoir could begin in Picture Butte, 200 km southeast of Calgary. Then, on July 12, Gainers spokesman Douglas Ford told reporters that the company was experiencing “a difficult year” because of a downturn in the hog industry.

The actual extent of Gainers’ financial problems remains uncertain. Pocklington did not return calls from Maclean ’s. At the same time, an audit of Gainers conducted for Lloyds Bank Canada by Coopers & Lybrand concluded that the company can remain solvent. And Pocklington has announced that he will “financially backstop” the troubled firm. Still, the Getty government clearly knew Gainers was in some trouble. On July 18—the same day that lawyer William Code released his report on the Principal collapse—Johnston acknowledged that the government knew all along that there was never any possibility that Gainers would use the government aid to finance a new plant.

So far, Pocklington has received only $6 million of the $ 12-million low-interest loan that Getty’s cabinet approved on March 3,1988. At the same time, he has used part of the $55 million in loan guarantees to secure some of Gainers’ existing bank debt. But the latest revelations have raised further questions about Gainers’ future. First came the report that Pocklington had had discussions with the Quebec government about expanding into that province. Then came Isley’s announcement about the likelihood of the Gainers Edmonton meat-packing plant closing down. But on Thursday, Aug. 3, Johnston insisted that the loan arrangement with Gainers included a “master agreement” with Pocklington that the Edmonton plant would remain open. And Johnston warned that the government would sue Pocklington if he tried to shut it down. Johnston also threatened to block any attempt by Pocklington to move part of his Edmonton operations to Quebec.

If Pocklington does close Gainers, it will not be the first time that he has allowed one of his floundering companies to fail. His Fidelity Trust Co. Ltd. collapsed in 1983, after Pocklington refused to pump in the $20 million that regulators said was necessary to keep it afloat. But if Gainers fails, 1,600 jobs will disappear and Alberta’s taxpayers will lose a large portion of the $61 million in loans and guarantees if the company declares bankruptcy and its assets are liquidated. In that case, government assistance would have failed to save the champion of free enterprise.

JOHN DeMONT

PAUL RODGERS

KERRY DIOTTE