Business

Toughing it out at the city’s heart

Roderick McQueen November 6 1978
Business

Toughing it out at the city’s heart

Roderick McQueen November 6 1978

Toughing it out at the city’s heart

Business

It’s a fall Friday in October and Bruce McLaughlin, multimillionaire land developer, is pacing the grounds of his Mississauga, Ontario, mansion. Stretching for miles from his burdened shoulders are the new houses, plazas, offices, showcase industries and lifelines of a community that didn’t exist 11 years ago. Perched on the western rim of Toronto sit Mississauga’s 260,000 people in a city that is largely the real-

ized dream of this one lonely man. He wanders in a windbreaker and peaked cap, deep in his own thoughts, the week when two bond-rating firms suspended his company’s ratings, making public financing impossible. A longtime acquaintance driving by sees the shadow of someone else: “I literally had to look

twice. It looked just like Richard Nixon wandering through San Clemente.” Another friend, reflecting widespread concern for McLaughlin’s future, describes him as “desperate” as he battles take-over attempts backed by Seagram heirs Edward and Peter Bronfman at a time when his cash flow has all but dried up. For, like many developers, S.B. McLaughlin Associates Ltd. is land-rich, but cash-poor. A cottage-builder in the 1940s, he assembled land in the 1950s, formed his company in 1957, built through the 1960s, and diversified in the 1970s, thus planting the seeds of his current dilemma. Losses ($4.6 million in the first six months of 1978) could reach $10 million by year end. Says real-estate analyst Ira Gluskin, of Brown, Baldwin, Nisker Ltd.: “Nobody in the world has ever ruined a company like this one man.”

With corporate assets over $250 million and a personal fortune into eight figures, McLaughlin is seen to be a man in trouble. One cause is a hotel rising 37 unfinished storeys above Montreal’s Dorchester Boulevard that has cost $30 million and needs $35 million more; another is North Vancouver’s Grouse Mountain Resorts Ltd. where the last two winters have seen little snow. Those costly ventures and sluggish Ontario real-estate markets have drained corporate cash. Finally, there’s the muchneeded $40-million deal with Calgarybased Abacus Cities Ltd. which was to have closed Oct. 23 (now extended into November), injecting both cash and cash flow in return for a joint-venture position on 2,204 Mississauga acres. Abacus vice-president, finance, Ross Amos says it’s “signed and sealed, but not delivered,” while another source says it may never go through.

It is, however, the fight with the 65per-cent Bronfman-owned Mico Enterprises Ltd. that brings bile to McLaughlin’s lips. “It’s regrettable that such a major financial group and an entrepreneur should be involved in discussing a private matter in public.” Admitting none of the problems others see, he is quick to point out his firm has paid off $55 million in bank debts in the past 18 months. “Someone,” he insists, “is stirring up a lot of gossip.” Mico owns 40 per cent, McLaughlin 60 per cent, of S.B. McLaughlin & Co., the private holding company controlling 51 per cent of the public company, S.B. McLaughlin Associates Ltd., of which he is president. Under agreed terms, Mico asked McLaughlin in December, 1976, to buy its 40 per cent, expecting payment within 12 months. Necessary written notice was not given until July 10,1978, because, it has been said, McLaughlin asked Mico not to write. McLaughlin smells take-over, a charge Mico denies, although Mico sent letters to McLaugh-

lin’s five outside directors in October proposing financial support and McLaughlin’s ouster.

At 52, he is aroused that someone is gunning for his life’s work. “The ultimate resolution is for me to pay them [before July 10, 1979],” says McLaughlin, but Mico wants the estimated $10 million sooner. If the Abacus deal falls through, McLaughlin will have to find a new partner or get interim bank financing. Says Bank of Montreal Executive Vice-President and General Manager Hart MacDougall: “My guys are in discussion with Bruce. They’re trying to work something out. I don’t want to say I’m 20-per-cent optimistic or I’m 80per-cent optimistic: I’m just hopeful.” That hope for survival is some distance from the euphoric go-go days five years ago. But there exists some optimism in the financial community that the firm may come through unscathed because of its valuable assets, although McLaughlin, the man, may be forced to share or even lose control. Says one Bay Street source: “The forces for accommodation and resolve are usually pretty compelling. Blowing ships out of the water tends to create problems for too many people.” McLaughlin is rallying support and waves a sheaf of letters in his office as he proclaims: “I’m an honorable man and a creative man and these letters show that others agree.” He says former employees, politicians and businessmen are among those who have written supportive letters since news spread of his fight with Mico. In the end, it may be his philosophy, not letters, that will carry him through. He throws both hands up with a what-meworry wave, and says: “Life is a game; business is a game.” And the talk turns from the unfinished hotel to plans for another hotel in Mississauga. Suddenly he announces: “It’ll all be over in 30 days,” and points to an employee, saying: “And then I want a lower profile.” He adds almost plaintively: “If only people would just leave me alone, and let me build.”

Roderick McQueen